# Practice Exercise 23I: Cost of Leasing

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Homework
Complete Practice Exercise 23-I on page 400 and Assignment Exercise 23-1 on pages 400?401 in your course text. See Below
Practice Exercise 23I: Cost of Leasing
A cost of leasing table is reproduced below.
Required
Using the appropriate table from the Chapter 12 Appendices, record the present value factor at 6% for each year and compute the present value cost of leasing.
Cost of Leasing: Suburban Clinic?Comparative Present Value
Not-for-Profit Cost of Leasing: Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Net Cash Flow (11,000) (11,000) (11,000) (11,000) (11,000) ?
Present value factor (at 6%)
Present value cost of leasing =
Assignment Exercise 23?1: Cost of Owning and Cost of Leasing
Cost of owning and cost of leasing tables are reproduced below.
400401
Required
Using the appropriate table from the Chapter 12 Appendices, record the present value factor at 10% for each year and compute the present value cost of owning and the present value of leasing. Which alternative is more desirable at this interest rate? Do you think your answer would change if the interest rate was six percent instead of ten percent?
Cost of Owning: Anywhere Clinic?Comparative Present Value
For-Profit Cost of Owning: Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Net Cash Flow (48,750) 2,500 2,500 2,500 2,500 5,000
Present value factor