Assume the initial financing provided by a lease is $500,000 and the present value of the cash outflow attributable to the lease is $525,000. Then the net value of the lease is

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Quizplus · Accepted Answer

The net value of the lease is calculated as the difference between the initial financing provided by the lease and the present value of the cash outflow attributable to the lease. In this case, the net value of the lease is $500,000 - $525,000 = -$25,000. This means that the lease is not a profitable investment and has a negative net present value.

Assume the Initial Financing Provided by a Lease Is $500,000