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I have the BPP Study Text for Paper F9 (pg 210 Ex 1.11), cant get my head round the following and would be eternally grateful for any words of wisdom;
I calculated the options for Buy vs Lease decision from the Lessee perspective and have that part nailed. I then proceeded to do the view point of the Lessor and cannot understand why the Disposal proceeds Tax element is ignored completely in Lessors NPV….
All the other elements are present, ie The (20)k Purchase Cost, 4k Disposal, Tax Savings from Capital Allowances (25% RB Method @ 30% Tax) as well as the Lease Income & subsequent Tax impacts—>
MAIN QUESTION——>Why is the Disposal Tax impact not included in the Lessor NPV workings?
Thanks in advance..
Craig
I do not have the BPP Study Text – only the Revision Kit – and therefore I cannot help you.
(There have never been exam questions asking to look from the point of view of the lessor – only from the lessee).
Have you watched our free lectures? They are a complete free course for Paper F2 and cover everything needed to be able to pass the exam well.
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