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Investment decision

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › Investment decision

  • This topic has 1 reply, 2 voices, and was last updated 4 years ago by John Moffat.
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    Posts
  • August 22, 2020 at 9:42 am #581472
    Pratibhapahwa4313
    Member
    • Topics: 11
    • Replies: 5
    • ☆

    Question – A co. wants a machine costing $20,000. It can either borrow the money from its bank at a pre tax cost of 7%( post tax 5%) or lease the machine for three years at an annual cost of 9300 in arrears. The tax rate is 30% and the lease payment qualify for tax relief at the time of payment.

    What is the present value of the lease payment ?

    August 22, 2020 at 10:44 am #581477
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54671
    • ☆☆☆☆☆

    Please do not type out full questions and expect to be provided with a full answer. You must have an answer in the same book in which. you found the question, so ask about whatever it is in the answer that you are not clear about and then I will explain.

    Have you watched my free lectures on lease and buy where the approach is all explained?

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