Revision 2 – Investment Appraisal

The benefits of leasing vs purchasing (with a loan) can be assessed by an NPV approach: Step 1: the . cost of leasing (payments, lost capital allowances and lost scrap revenue) Step 2: the . benefits of leasing (savings on loan repayments = PV of loan = initial outlay) Step 3: discounting at the after tax cost of debt. Step 4: calculate the NPV ................
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