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What is the npv of the lease-kiwi airline

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Kiwi Airline is considering the addition of a new Boeing 747 to its fleet. A Boeing 747 costs $200 million to purchase. Alternatively, Kiwi can lease the aircraft from TLC Leasing for 8 years with a lease payment of $30 million each year, payable annually in advance. The aircraft will be depreciated over 6 years on a straight-line basis and its disposal value at the end of the lease is expected to be $15 million. If Kiwi buys the Boeing, the purchase will be financed by long term debt at 8% p.a. Kiwi pays a 30% corporate tax rate. What is the NPV of the lease?

Reference no: EM132645389

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