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Respected Sir John.
i am facing this issue in this question related to operating lease.
1) first of all i did not understand why at the back of the book examiner has taken annuity of 3 years while in the question it is clearly mentioned that the contract length is 1 year.
2) Secondly, i also did not understand the meaning of this statement written in the question ” for operating lease only, contracts are renewable annually at the discretion of either party.”
3) also I need to ask if it is necessary in the exam to use annuity for the calculation of finance lease and operating lease ? because i calculated it in a way if cashflows were not same.
so can we calculate it in this way ?also in question it is said that “all lease rentals are can be assumed to be allowable for tax purposes in full in the year of payment”
why is it still that we placed values of tax saving on rentals in arrears for operating lease?You are going to have to tell me where to find this question.
If it is marked as being a past exam question then please tell me the date of the exam that is quoted (I think it probably is a past question, but I cannot remember the name and date of all past exam questions 🙂 )
I do have all past exam questions, so if you tell me the date of the exam then I will be able to find it.
Although I said that I had all past questions, in fact I only keep them for the last 15 years. The question you refer to is now over 20 years old!!
However, from what you have written it seems you will find answers to it all by watching my free lectures on lease and buy (and the lectures on investment appraisal with tax).
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