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-United Hospital has received a leasing proposal from Leasing, Inc., for a Siemens cardiac… 1 answer below » -United Hospital has received a leasing proposal from Leasing, Inc., for a Siemens cardiac catheterization unit. The terms are: • Five-year lease • Annual payments of $200,000 payable one year in advance • Payment of property tax estimated to be $23,000 annually • Renewal at end of year 5 at fair market value Alternatively, United Hospital can buy the catheterization unit for $725,000. This purchase would require United Hospital to debt-finance this equipment. It anticipates a bank loan with an initial down payment of $125,000 and a three-year term loan at 16 percent with equal principal View complete question » -United Hospital has received a leasing proposal from Leasing, Inc., for a Siemens cardiac catheterization unit. The terms are: • Five-year lease • Annual payments of $200,000 payable one year in advance • Payment of property tax estimated to be $23,000 annually • Renewal at end of year 5 at fair market value Alternatively, United Hospital can buy the catheterization unit for $725,000. This purchase would require United Hospital to debt-finance this equipment. It anticipates a bank loan with an initial down payment of $125,000 and a three-year term loan at 16 percent with equal principal payments. The residual value of the equipment at year 5 is estimated to be $225,000. The lease is treated as an operating lease. Depreciation is calculated on a straight-line basis. Assuming a discount rate of 14 percent, what financing option should United Hospital select? Assume that there is no reimbursement of capital costs View less » Feb 07 2016 11:21 AM
