1. The annual lease rental is Rs 1.5 lac per annum. The after-tax borrowing rate is 7 percent. The lease term is 8 years. Find the monthly lease rental.
2. Can leasing become viable because of better credit rating of the lessor? How? Why; or, why not?
Refer to the given data:
Asset cost = Rs 220 lac
Lease payments for the first 7 years = Rs 23 lac
Lease payments for the next 8 years = Rs 28 lac
Salvage value = 0
Lease payments are made at the end of the year
Cost of debt for the lessee is 9 percent after tax
Depreciation is charged @ 25 percent.
Tax rate is 35 percent.
Find the NAL. Would you lease?
Rework with a tax rates of 35 percent and 0 percent for the lessor and the lessee respectively. What is the break-even lease rental?
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