Abc Limited Has Decided To Acquire A Piece Of Equipment Costing 240000 For Five Year 2835262

ABC Limited has decided to acquire a piece of equipment costing 240000 for five years.The equipment is expected to have a salvage value at the end and the company uses straight line depreciation method on all its fixed assets.The company has two financing alternatives,borrowing and leasing.The loan has an interest rate of 2% requiring equal year end instalments to be paid.The risk could be set at a level that would amortize the cost of equipment over the risk period and would provide a lessor with a 14% retain on capital.The company’s depreciation rate is 40%.Required:Compute; The annual lease payment. The present value of the cash outflow under lease financing. The annual loan amortization schedule.

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