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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 answer =

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

Present value answers =

Present value cost of owning =

Cost of Leasing: Anywhere Clinic?Comparative Present Value

Line

# For-Profit Cost of Leasing:

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5

19 Net Cash Flow (8,250) (8,250) (8,250) (8,250) (8,250) ?

20 Present value factor

21 Present value answers =

22 Present value cost of leasing

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