(Ignore income taxes in this problem.) The Wisbley Company is contemplating the purchase of a helicopter for its executives to use in their business trips. This helicopter could be either purchased or leased from the manufacturer. The useful life of the helicopter is four years. Data concerning these two alternatives follow: If the helicopter is leased, it would be returned to the manufacturer in four years. Wisbley's required rate of return is 22%.
-The incremental net present value in favor of leasing rather than purchasing is (rounded off to the nearest hundred dollars):

Question

(Ignore income taxes in this problem.) The Wisbley Company is contemplating the purchase of a helicopter for its executives to use in their business trips. This helicopter could be either purchased or leased from the manufacturer. The useful life of the helicopter is four years. Data concerning these two alternatives follow:  If the helicopter is leased, it would be returned to the manufacturer in four years. Wisbley's required rate of return is 22%.
-The incremental net present value in favor of leasing rather than purchasing is (rounded off to the nearest hundred dollars):

Quizplus · Accepted Answer

The incremental net present value (NPV) is calculated by comparing the NPV of leasing versus purchasing. The correct choice, $188,100, represents the difference in favor of leasing.

(Ignore Income Taxes in This Problem