None An asset costs $600,000 and will be depreciated in a straight-line manner over its three-year life. It will have no salvage value. The lessor can borrow at 6.5 percent and thelessee can borrow at 8 percent. The corporate tax rate is 21 percent for both companies.a. What lease payment will make the lessee and the lessor equally well off? (Do notround intermediate calculations and round your answer to 2 decimal places, e.g.,32.16.)Lease payment$232,653.28b. Assume that the lessee pays no taxes and the lessor is in the 21 percent tax bracket.For what range of lease payments does the lease have a positive NPV for both.parties? (Enter your answers from lowest to highest. Do not round intermediatecalculations and round your answers to 2 decimal places, e.g., 32.16.)Lease paymentto

Answered: Image /qna-images/answer/243e04b0-edbf-43fe-8344-f119aebe9066.jpg

Answered: An asset costs $600,000 and will be…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Most businesses replace their computers every two to three years. Assume that a computer costs $2,000 and that it fully depreciates in 3 years, at which point it has no resale value and is thrown away. Suppose the computer did not fully depreciate but still had a $250 value at the time it was replaced. What is the minimum annual cash flow that a computer must generate to be worth the purchase? The minimum annual cash flow must be at least $
Lewis’s management has been considering movingto a new downtown location, and they are concerned that these plans may come to fruition priorto the equipment lease’s expiration. If the moveoccurs then Lewis would buy or lease an entirelynew set of equipment, so management wouldlike to include a cancellation clause in the leasecontract. What effect would such a clause haveon the riskiness of the lease from Lewis’s standpoint? From the lessor’s standpoint? If you werethe lessor, would you insist on changing any ofthe other lease terms if a cancellation clause wereadded? Should the cancellation clause containprovisions similar to call premiums or any restrictive covenants and/or penalties of the type contained in bond indentures? Explain your answer.
. Over the past year, a company has sold the following 10 items. The following tableshows the annual sales in units and the cost of each item.a. Calculate the annual dollar usage of each item.b. List the items according to their total annual dollar usage.c. Calculate the cumulative annual dollar usage and the cumulative percentage ofitems.d. Group the items into A, B, and C groups based on percentage of annual dollarusage
Question 6 (22 pts): Margin Account Assume you sell one July '23 KC HRW contract today at $5.2875; its initial is $2,310 with a maintenance of $2,100. ○ Today July KC HRW settles at 528'6. What do you deposit in the margin account? 。 Session 2 - July KC HRW settles at 530'2 What is the gain or loss from session 2? What is the balance? Is there a margin call? If so, what is it? ○ Session 3 - July KC HRW settles at 526'6 What is the gain or loss from session 3? What is the balance? Is there a margin call? If so, what is it? ○ Session 4 - Offset July KC HRW at 536'4 What is the gain or loss from session 4? What is the balance? Is there a margin call? If so, what is it? ○ Session 5 - Offset July KC HRW at 540'2 Calculate the profit or loss on the trade.
Chapter 27 Review 14 Sovell Help Save & Exit Subr Shepherd's Homes is evaluating the lease versus the purchase of a machine costing $241,000 that would be depreciated using MACRS over a four- year period, after which the machine would be worthless. MACRS rates are 33.33 percent, 44.44 percent, 14.82 percent, and 7.41 percent for Years 1 to 4. respectively. The machine could be leased for $91,000 per year for four years. The firm can borrow at 5.7 percent and has a tax rate of 21 percent However, the firm does not expect to pay any taxes for the next five years. What is the net advantage to leasing? eBook Multiple Choice References -$76,503 $2,218 $983 $118,718
Economics Equipment that was purchased for $800,000 has a current book value of $400,000. Assume a capital gains tax rate of 28%. Compute the net tax payment or savings if you sell the equipment for $603,833. $57,073, an increase in taxes $-57,073, a savings on taxes $203,833, an increase in taxes O $-54,927, a savings on taxes PLEASE SHOW ALL STEPS AND CORRECT ANSWER
The asset appears always at original cost in case depreciation is credited to provision for depreciation account. a. True b. False
Jane quit her job at IBM where she earned $50,000 a year. She cashed in $50,000 in corporate bonds that earned 10% interest annually to buy a mini-bus. Jane has decided to buy the mini-bus and set up a commuter service between Lincoln and Omaha. There are 1000 people who will pay $400 a year each for the commuter service; $280 from each person goes for gas, maintenance, insurance, depreciation, etc. What are Jane's total revenue? A. $600,000 B. $250,000 C. $400,000 D. $480
Calculate the present value of an asset that pays $225 at the end of each year for 6 years and has a face value payment of $500
______6 Mauro Products distributes a single product, a woven basket whose selling price is $17 and whose variable expense is $14.96 per unit. The company's monthly fixed expense is $3,672. a. Solve for the company's break-even point in unit sales using the equation method. b. Solve for the company's break-even point in dollar sales using the equation method and the CM ratio.
Use the definition of the effective rates of interest and discount. j=[Amount at s+t - Amount at s] / [Amt at s]. d_j=[Amount at s+t - Amount at s] / [Amt at s+t]. For 8 items c & d, if j (d_j) is nominal then effective interest (resp. discount) every mth of a period is j^(m)/m (resp. d^(m)/m).
Laila’s Surveying Inc. had revenues of $1.5 million in 2016. Expenses totaled $900,000. What was her net profit (or loss) if the tax rate is 38%?

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