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John has been asked to evaluate whether it would be better to lease an asset or to borrow money from the bank to buy the
Posted: Wed Mar 30, 2022 3:41 pm
by answerhappygod
- John Has Been Asked To Evaluate Whether It Would Be Better To Lease An Asset Or To Borrow Money From The Bank To Buy The 1 (107.56 KiB) Viewed 40 times
John has been asked to evaluate whether it would be better to lease an asset or to borrow money from the bank to buy the asset, for a potential project. The NPV from the project has been estimated to be $1,000. The NPV for the lease versus borrow to buy has been estimated to be -$1,200. Which of the following statements best describe the decision that John should make? O None of the other statements is correct. John should borrow to buy the asset and invest in the project as it will increase the value of the
company. O John should lease the asset and invest in the project as long as the periodic lease payment is less than $1,200. O John should not invest the project at all because the total NPV is -$200. John is indifferent between borrowing to buy the asset and leasing the asset.