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Fundamentals of Corporate Finance 3rd Edition Berk Solutions Manual

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Fundamentals of Corporate Finance 3rd Edition Berk Solutions Manual Full clear download( no error formatting) at: https://goo.gl/gpr8rJ berk demarzo and harford fundamentals of corporate finance 3rd edition pdf fundamentals of corporate finance 3rd edition ebook fundamentals of corporate finance 3rd edition access code fundamentals of corporate finance 3rd edition solutions fundamentals of corporate finance 3rd edition test bank isbn: 9780133507676 isbn 9780134475561 fundamentals of corporate finance 3rd edition parrino
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  Fundamentals of Corporate Finance 3rd Edition Berk Solutions Manual  Full clear download( no error formatting) at: https://testbanklive.com/download/fundamentals-of-corporate-finance-3rd-edition-berk-solutions-manual/  Fundamentals of Corporate Finance 3rd Edition Berk Test Bank   Full clear download( no error formatting) at: https://testbanklive.com/download/fundamentals-of-corporate-finance-3rd-edition-berk-test-bank/  1 Leasing   Learning Objectives   ã Know typical lease types and terms  ã Understand  the accounting,   tax,  and legal   consequences of leasing  ã Decide whether to  buy or lease an asset  ã Evaluate the reasons for leasing   notation    APR   annual percentage rate  FCF   free cash flow  r  D debt cost of capital  T  c    marginal   corporate   income tax rate L   lease  payments   NPV    net  present value  t  o   implement an investment project, a firm must   acquire   the necessary property, plant, and equipment. As an alternative to  purchasing these assets outright, the firm   can lease them. You are  probably familiar with leases if you have leased a car or rented an apartment. These    consumer rentals are similar to the leases used by businesses: The owner retains title to the asset, and the firm    pays for its use of the asset through regular lease  payments. When firms lease  property, plant, or equipment,   the leases generally exceed one year. This chapter focuses on such long-term l eases.  If you can  purchase an asset, you can  probably lease it. Commercial real estate, computers, trucks, copy   machines, airplanes, and even power plants are examples of assets that firms can lease rather than buy. Equip- ment leasing is a rapidly growing industry, with more than one-half of the world’s  leasing now being done  by   companies in Europe and Asia. In 2008, more than 30% of the  productive assets acquired by U.S. companies   were procured through leasing contracts, for a total leasing volume exceeding $250 billion. Eighty-five  percent   of U.S. companies lease all or some of their equipment, and more than 25% of the world’s    jet fleet, by dollar    value,   is  leased. 1   The   top   aircraft   leasing   company    by   fleet   size   at  the start of   2013 was GE   Capital   Aviation   1 Beacon Funding ( www .beaconfunding.com/vendor_programs/statistics.aspx).  1  2   Web Chapter 1   Web Chapter 1   2   Services.   GE   owns  and manages over   1670 aircraft,  the world’s  largest commercial   airplane   fleet. 2   GE   leases   these commercial aircraft to some 230 airline customers in over 75 countries.  As you will learn, leases are not merely an alternative to  purchasing; they also function as an important   financing method for tangible assets. In fact, long-term leasing is the most common method of equipment   financing. How do companies such as GE Capital Aviation Services set the terms for their leases? How do their    customers  —  the commercial airlines  —  evaluate and negotiate these leases? In this chapter, we first discuss the    basic types of leases and provide an overview of the accounting and tax treatment of leases. We next show how   to evaluate the lease-versus-buy decision. Firms often cite various benefits to leasing as compared to  purchasing    property and equipment, and we conclude the chapter with an evaluation of their reasoning.  1.1 The Basics of Leasing   A lease is a contract between two parties: the lessee and the lessor  . The lessee is liable lessee the  party in a   lease who is liable for     periodic payments in   exchange for the right to   use the asset  lessor the  party in a lease   who is the owner of the   asset, and who is entitled to   the lease payments  sales-type lease a lease   in   which the lessor is the   manufacturer (or a primary   dealer) of the asset  direct lease a lease in   which the lessor is not the   manufacturer, but is often   an independent company   that specializes in  pur- chasing assets and leasing  them to customers  sale and leaseback a   lease in which the lessee   receives cash from the sale of the asset and then  makes lease  payments to   retain the use of the asset  leveraged lease a lease   in   which the lessor  bor- rows from a  bank or other    lender to obtain the initial   capital for the purchase,   using the lease payments   to  pay the interest and    principal on the loan  for periodic payments in exchange for the right to use the asset. The lessor is the owner of the asset, who is entitled to the lease payments in exchange for lending the asset. Most leases involve little or no upfront payment. Instead, the lessee commits to make regular lease (or rental) payments for the term of the contract. At the end of the contract term, the lease specifies who will retain ownership of the asset and at what terms. The lease also specifies any cancellation provisions, the options for renewal and purchase, and the obligations for maintenance and related servicing costs.  Examples of Lease T ransactions   Many types of lease transactions are possible based on the relationship between the lessee and the lessor. In a sales-type lease , the lessor is the manufacturer (or a  pri - mary dealer) of the asset. For example, IBM  both manufactures and leases computers. Similarly, Xerox leases its copy machines. Manufacturers generally set the terms of these leases as part of a broader sales and pricing strategy, and they may bundle other services or goods (such as software, maintenance, or product upgrades) as part of the lease. In a direct lease , the lessor is not the manufacturer,  but is often an independent com-  pany that specializes in purchasing assets and leasing them to customers. For example, Ryder System, Inc., owns more than 135,000 commercial trucks, tractors, and trailers, which it leases to small businesses and large enterprises throughout the world. In many instances of direct leases, the lessee identifies the equipment it needs first and then finds a leasing company to purchase the asset.  If a firm already owns an asset it would prefer to lease, it can arrange a sale and leaseback transaction. In this type of lease, the lessee receives cash from the sale of the asset and then makes lease payments to retain the use of the asset. In 2002, San Francisco Municipal Railway (Muni) used the $35 million in proceeds from the sale and leaseback of 118 of its light-rail vehicles to offset a large operating budget deficit. The purchaser, CIBC World Markets of Canada, received a tax benefit from depreciating the rail cars, something Muni could not do as a public transit agency. With many leases, the lessor provides the initial capital necessary to purchase the asset, and then receives and retains the lease payments. In a leveraged lease , however, the lessor  borrows f  r  o m  a bank or other lender to obtain the initial capital for the purchase, using t h e    3   Web Chapter 1   Web Chapter 1   3   2 GE Capital A viation Services Global Fact Sheet (http://www.gecas.com/en/docs/GECASFSJ2013.pdf ).
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