Alternative Lease
Not what you're looking for?
You need a new CT scanner. The scanner can be leased under one of two options. Option A is a straight lease payment of $180,000 per year, payable one year in advance. Option B is a per-procedure lease basis. Under option B, you would pay $50,000 per year regardless of volume, payable one year in advance. In addition, $100 per procedure would be paid at year end. In each case, the lease term is 5 years. Expected volumes for the CT scanner by year are: 1,000?year 1; 1,200?year 2; 1,500 in years 3, 4 and 5. Which lease has the lowest net present value cost if the discount rate is 12%?
Purchase this Solution
Solution Summary
This solution goes through two alternative leases within the context of finance.
Purchase this Solution
Free BrainMass Quizzes
SWOT
This quiz will test your understanding of the SWOT analysis, including terms, concepts, uses, advantages, and process.
Social Media: Pinterest
This quiz introduces basic concepts of Pinterest social media
Writing Business Plans
This quiz will test your understanding of how to write good business plans, the usual components of a good plan, purposes, terms, and writing style tips.
Business Ethics Awareness Strategy
This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.
Employee Orientation
Test your knowledge of employee orientation with this fun and informative quiz. This quiz is meant for beginner and advanced students as well as professionals already working in the HR field.