cima-f3CIMA F3 Lease or buyYouTube videoPlay video5 CommentsTTan·6y ago3.13 BPP a business has decided to install a new mechine. $50K , useful life five years with trade in value 10k at the end of the fifth year. the business could purchase the machine for cash, using bank loan facilities - cost of debt 9% after tax. the tax rate is 30%. and will be able to claim tax depreciation allowance in year 1. tax is payable with no delay. what is the PV of the purchase cost. Answer : 31700. (-50k X 1) + (7k x 0.650 ) + year 1 - 100% Tax saving (50x30% X 0.917). 1thing i am confuse are its should expense off the tax saving for 10k trade in value. by 10k x 0.3 x 0.650 = 1.95k and my answer is 31700 + 1950 = 33650 cost?TTan·6y agoHi leature. please help on this. thank youTTan·6y agoMy mistake. 7k already included the tax deduction.BBen·6y agoWhy does the lease start at T0 and not at T1?BBen·6y agoIgnore me i get it now :-)Leave a commentPost comment
a business has decided to install a new mechine. $50K , useful life five years with trade in value 10k at the end of the fifth year.
the business could purchase the machine for cash, using bank loan facilities - cost of debt 9% after tax.
the tax rate is 30%. and will be able to claim tax depreciation allowance in year 1. tax is payable with no delay.
what is the PV of the purchase cost.
Answer : 31700.
(-50k X 1) + (7k x 0.650 ) + year 1 - 100% Tax saving (50x30% X 0.917).
1thing i am confuse are its should expense off the tax saving for 10k trade in value. by 10k x 0.3 x 0.650 = 1.95k
and my answer is 31700 + 1950 = 33650 cost?