罗斯《公司财》英文习题答案DOCchap021.docVIP

Chapter 21: Leasing 21.1 a. Leasing can reduce uncertainty regarding the resale value of the asset that is leased. b. Leasing does not provide 100% financing although it may look as though it does. Since firms must try to maintain their optimal debt ratio, the use of lease simply displaces debt. Thus, leasing does not provide 100% financing. c. Although it is true that leasing displaces debt, empirical studies show that the companies that do a large amount of leasing also have a high debt-to-equity ratios. d. If the tax advantages of leasing were eliminated, leasing would probably disappear. The main reason for the existence of long-term leasing is the differential in the tax rates paid by the lessee and the lessor. 21.2 a. NPV (lease) = $250,000 - L = $250,000 - 3.9927 L = $0 L = $62,614.11 The lease payment is Quartz’a reservation price. b. Depreciation = $250,000 / 5 = $50,000 per annum Depreciation tax shield = $50,000 ( 0.35 = $17,500 After-tax discount rate = 0.08 (1 - 0.35) = 0.052 NPV (lease) = -$250,000 + L (1 - 0.35) + $17,500 = $0 L = $62,405.09 This lease payment is New Leasing Co’s reservation price. c. If the lease price is greater than Quartz’s reservation price, the lease is a negative NPV proposal for Quartz. Quartz would rather purchase the equipment than lease at a payment above its reservation price. Thus, the lessee’s reservation price is the maximum of the negotiation range.  21.3 Incremental cash flows from leasing instead of purchasing: Lease minus Buy Year 0 Year 1 - 5 Lease Lease payment -$94,200 Tax benefit of lease payment $32,970 Buy (minus) Cost of machine -(-$350,000) Lost depreciation tax benefit -$350,000/5 ( 0.35 = -$24,500 Total $350,000 -$85,730 NPV = $350,000 - $85,730 = -$102.66 $0 The firm should buy the machine. 24.4 Maxwell’s reservation price: NPV (lease) = $200,000 - L = $200,000 - 3.7908 L = $0 L