Buffalo Inc. is considering whether to lease or purchase a piece of equipment. The total cost to lease the equipment will be $137,000 over its estimated life, while the total cost to buy the equipment will be $83,000 over its estimated life.   At Buffalo’s required rate of return (hurdle rate), the net present value of the cost of leasing the equipment is $78,300 and the net present value of the cost of buying the equipment is $72,000. Based on financial factors, Buffalo should:     Multiple Choice   buy the equipment, saving $6,300 over leasing.   lease the equipment, saving $6,300 over buying.   lease the equipment, saving $54,000 over buying.   buy the equipment, saving $54,000 over leasing.

MTN is trying to decide whether to lease or buy some new equipment for its tool and die operations. The equipment costs ¢1.5 million has a 8-year life, and will be worthless after the 8 years. The pre-tax cost of borrowed funds is 8 percent and the tax rate is 32 percent. The equipment can be leased for ¢240,000 a year. What is the net advantage to leasing (NAL)?

Wilson Corp, is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in net income after tax of $50,000. The equipment will have an initial cost of $600,000 and have an 8-year life. The salvage value of the equipment is estimated to be $100,000. If the hurdle rate is 10%, what is the approximate net present value? (Future Value of $1. Present Value of $1. Future Value Annuity of $1. Present Value Annuity of $1.) (Use appropriate factor from the PV tables. Round your final answer to the nearest dollar amount.) Multiple Choice $500,000 $46,826 $100,000 Less than zero

Blossom Company is considering buying a new farm that it plans to operate for 10 years. The farm will require an initial investment of $11.80 million. This investment will consist of $2.00 million for land and $9.80 million for trucks and other equipment. The land, all trucks, and all other equipment are expected to be sold at the end of 10 years for a price of $5.00 million, which is $2.00 million above book value. The farm is expected to produce revenue of $2.00 million each year, and annual cash flow from operations equals $1.90 million. The marginal tax rate is 25 percent, and the appropriate discount rate is 9 percent. Calculate the NPV of this investment. (Do not round factor values. Round final answer to 2 decimal places, e.g. 5,275.25.) NPV $ The project should be

New equipment costs $847,000 and is expected to last for five years with the salvage value of 10% of the equipment cost. During this time the company will use a 20% CCA rate. The new equipment will save $280,000 annually before taxes. If the company's required rate of return is 5.35%, determine the PVCCATS of the purchase. Assume a tax rate of 35%. Please show all the calculations by which you came up with the final answer.

A proposed cost-saving device has an installed cost of $905,000. The device will be used in a five-year project but is classified as three-year MACRS property for tax purposes. The required initial net working capital investment is $65,000, the tax rate is 22 percent, and the project discount rate is 9 percent. The device has an estimated Year 5 salvage value of $125,000. What level of pretax cost savings do we require for this project to be profitable? (MACRS schedule) Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Required cost savings

i need the answer quickly

Managers at Eller Manufacturing are considering purchasing a new refrigerated delivery truck that will produce equal annual cash flows of $36,000 for 6 years. The truck's net present value is $12,780, its cost is $144,000, its useful life is 6 years, and its annual depreciation expense (no salvage value) is $24,000. What is the discount rate used by Eller to evaluate this project?

You must evaluate a proposal to buy a new milling machine. The purchase price of the milling machine, including shipping and installation costs, is $104,000, and the equipment will be fully depreciated at the time of purchase. The machine would be sold after 3 years for $43,000. The machine would require a $5,500 increase in net operating working capital (increased inventory less increased accounts payable). There would be no effect on revenues, but pretax labor costs would decline by $56,000 per year. The marginal tax rate is 25%, and the WACC is 8%. Also, the firm spent $4,500 last year investigating the feasibility of using the machine. a. How should the $4,500 spent last year be handled? I. Last year's expenditure is considered a sunk cost and does not represent an incremental cash flow. Hence, it should not be included in the analysis. II. The cost of research is an incremental cash flow and should be included in the analysis. III. Only the tax effect of the research expenses…

A proposed cost-saving device has an installed cost of $730,000. The device will be used in a five-year project but is classified as three-year MACRS property for tax purposes. The required initial net working capital investment is $140,000, the marginal tax rate is 22 percent, and the project discount rate is 10 percent. The device has an estimated Year 5 salvage value of $101,000. What level of pretax cost savings do we require for this project to be profitable? (MACRS schedule) (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Pretax cost savings $ 216,693.04