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Sahyadri papers ltd. Is planning to install a generator. The fnance manager has been asked to evaluate the alternative either to purchase or axuire in lease basis Buying Initial cost Residual value 500000 160000 Leasing Annual lease rentals Residual value 150000 90000 Depreciation at 20% p.a on written down value. Corporate tax rate is 40% after tax cost of debt is 14%. Evaluate the lease or buy decision.


Sahyadri papers ltd. Is planning to install a generator. The fnance manager has been asked to evaluate the alternative either to purchase or axuire in lease basis

Buying Initial cost Residual value
500000 160000

Leasing Annual lease rentals Residual value
150000 90000

Depreciation at 20% p.a on written down value. Corporate tax rate is 40% after tax cost of debt is 14%. Evaluate the lease or buy decision.

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1 Answers

Saurabh Koranglekar
askIITians Faculty 10336 Points
2 years ago
Dear student

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