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What is the NPV of the lease

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Reference no: EM132961990

Problem - Cayman Productions is considering either leasing or buying (via-debt ?nancing) some new underwater photographic equipment. The lessor charges $26,900 a year for a 2-year lease, starting year 1. The purchase price is $48,600. The equipment has a 2-year life after which time it will be worthless. Cayman uses straight-line depreciation, borrows money at 8 percent, and has sufficient tax loss carryovers to offset any taxes which otherwise might be owed for the next 4 years. What is the NPV of the lease?

Reference no: EM132961990

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