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:

Question

Quizplus · Accepted Answer

The net value of the lease is calculated by subtracting the present value of the cash outflows from the initial financing provided by the lease. In this case, $500,000 - $525,000 = -$25,000, indicating that the lease is not profitable and actually results in a net loss.

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