200,000Rs 27,59810 years10%50%maintenance, for payments of Rs 200,000 at the end of each year. Fewa's tax rate is 40Rs 20,000st of debtApplicable tax rateInvestment tax creditBeFewa Securities Inc. has decided to acquire a new market data and quotation system forits Pokhara home office. The system receives current market prices and otherinformation from several on-line data services, then either displays the information ccustomers to call up current quotes on terminals in the lobby. The equipment costs Rsa screen or stores it for later retrieval by the firm's brokers. The system also permits500,000, and, if it were purchased, Fewa could obtain a term loan for the full purchasemethod over 4-year life. Expected salvage value is Rs 50,000. As an alternative to theborrow-and-buy plan, the equipment manufacturer informed Fewa that consolidatedleasing would be willing to write a 4-year lease on the equipment, includingMethod of depreciation followed is straight-line depreciation.How do you analyze lease versus purchase decision using internal rate ofanalysis?returnMini CaseRead the following case situations and answer the questions that follow:onits Pokhara home office. The system receives current market prices and m focustomers to call up current quotes on terminals in the lobby. The equipment cosstraight linea screen or stores it for later retrieval by the firm's brokers. The system alsoprice at a 10 percent interest rate. The equipment is is depreciated onmethod over 4-year life. Expected salvage value is Rs 50,000. As an alternative totheleasing would be willing to write a 4-year lease on the equipment, includimaintenance, for payments of Rs 200,000 at the end of each year. Fewa's tax rate ipercent. You have been asked to analyze the lease-versus-purchase decision, and inprocess to answer the following questions:Who are the two parties to a lease transaction?Describe the various types of leases.1.What is Fewa's present value cost of leasing the equipment? What is the presevalue of cost of borrow and buy equipment? Would you recommend to purchasaor lease the asset?How do you treat repair and maintenance costs in lease versus purchase2.3.4.decision?and they are concerned that these plans may come to fruition prior to theexpiration of the lease. If the move occurs, Fewa would buy or lease an entirelynew set of equipment, and hence management would like to include a cancellationclause in the lease contract. What impact would such a clause have on theriskiness of the lease from Fewa's standpoint? From the lessor's standpoint? If youwere the lessor, would you insist on changing any of the lease terms if a5.Fewa's management has been considering moving to a new downtown locationcancellation clause were added?

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Parties to lease transaction

There are two parties to a lease transaction, namely, the lessor and…