Aviation 4.10 Dropbox Assignment 4

Aviation 4.10 Dropbox Assignment 4

Instructions

Use your own words, do not copy and paste the definitions.

1) In one paragraph, define external financing, internal financing, leasing, and equity capital.

2) What factors would tend to make leasing more desirable than owning?

3) What are the differences between a wet lease, an operating lease, and a financial lease?

4) On January 1, 2015, Middle Georgia Airlines (MGA) leased a DASH-8 from a leasing company (4-year lease). The lease agreement specifies four annual payments of $1.5 million beginning January 1, 2015, the inception of the lease, and then on each January 1 through 2018. The useful life of the aircraft is estimated to be seven years. Before deciding to lease, MGA considered purchasing the aircraft for its cash price of $6,200,000. How should this lease be classified?