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Question

0000000000000000000000000000000000000000000000000000000000000000000000000000000000 00000000000000000000000000000000000000000000000000000000000000000000000000000000000 00000000000000000000000000000000000000000000000000000000000000000000000000000000000 0000000000000000000000000000000000000000000000000000000000000000000000000000000000 000000000000000000000000000000000000000000000000000000000000000000000000000000000 000000000000000000000000000000000000000000000000000000000000000000000000000000000000 00000000000000000000000000000000000000000000000000000000000000000000000000000000000 00000000000000000000000000000000000000000000000000000000000000000000000000000000000 00000000000000000000000000000000000000000000000000000000000000000000000000000000 00000000000000000000000000000000000000000000000000000000000000000000000000000000000 000000000000000000000000000000000000000000000000000000000000000000000000000 0000000000000000000000000000000000000000000000000000000000000000000000000000000000 00000000000000000000000000000000000000000000000000000000000000000000000000000000000 00000000000000000000000000000000000000000000000000000000000000000000000000000000000 0000000000000000000000000000000000000000000000000000000000000000000000000000000000 000000000000000000000000000000000000000000000000000000000000000000000000000000000 000000000000000000000000000000000000000000000000000000000000000000000000000000000000 00000000000000000000000000000000000000000000000000000000000000000000000000000000000 00000000000000000000000000000000000000000000000000000000000000000000000000000000000 00000000000000000000000000000000000000000000000000000000000000000000000000000000 00000000000000000000000000000000000000000000000000000000000000000000000000000000000 000000000000000000000000000000000000000000000000000000000000000000000000000

Explanation / Answer

b) Year 0 1 2 3 4 Cost ofAsset -1,500,000 Dep. TaxSavings 198,000 270,000 90,000 42,000 Maintenance -45,000 -45,000 -45,000 -45,000 -45,000 Residualvalue 0 0 0 0 300,000 Net CashFlow -1,545,000 153,000 225,000 45,000 297,000 PV(15% * (1-0.4)) -1,545,000 140,367 189,378 34,748 210,402 PV cost ofowning -970,104 Year 0 1 2 3 4 Leasepayment -2,400,000 -2,400,000 -2,400,000 -2,400,000 PV -2,201,835 -2,020,032 -1,853,240 -1,700,221 PV cost ofleasing -7,775,328 NAL -6,805,223

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