lease vs buy

This topic has 1 reply, 2 voices, and was last updated 13 years ago by John Moffat.

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May 21, 2013 at 8:28 am #126426
clamy
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Hi John. I’ve got a question about video course -chapter 9 (DCF Lease versus Buy: Discounted Cash Flow Further Aspects). When calculating the NPV for buying, why not including the borrowing interest into account? Thank you.
May 21, 2013 at 2:22 pm #126500
John Moffat
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Hey – remember that the reason for discounting is to account for interest.

If we included the interest cash flows as well and then discounted, then we would be effectively accounting for the interest twice.
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