Vishal –Engineering Enterprises

Case on Hire Purchase & Leasing

Financial Lease

• Long-term, non-cancelable lease contracts are known as financial lease.

• Examples are plant, machinery, land, building, ships and aircrafts.

Discounting Rates

• Cost of borrowing(after tax) kd: 9.5%• Cost of capital(after-tax) k:12.0%

• Depreciation Tax Shield & After Tax Lease Rentals are discounted at 9.5%.

• After-tax Operating Expenses & Salvage Value are Discounted at 12%

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INTEREST CALCULATION

Hire Purchase of Vishal Engineering

Hire Purchase of Vishal Engineering