LeaseAfric Ltd. is considering the purchase of a fleet of cars for $337,500.00. It can borrow at 7.5%. The cars will be used for 4 years. The corporate tax rate is 35% and the cars belong in a 30% CCA class. Assuming beginning of period payments and no salvage value, what is the break-even lease payment? a) $101,024.32 b) $102,422.43 c) $91,632.31 d) $96,328.32 e) $110,104.11
Q: Treasury spot rates are as follows in today's market: Maturity (years) 1 2 3 Spot rate 2%…
A: Part 2:Answer: 3.3% > YTM > 2.7% Explanation:Step 1: Consider the given scenario.- The…
Q: None
A: Finding the Maximum Value of p = x - 2yWe want to maximize p = x - 2y, but there are limitations…
Q: • Suppose that on January 1, you have a credit card balance of $600.00. On January 10, you purchase…
A: To calculate the finance charge for January using the average daily balance method, we need to…
Q: F1
A:
Q: The spot price of a non-dividend paying stock is recorded as t70 at the close of the day. You…
A: A call option is a derivative instrument allowing the holder to purchase the associated asset at a…
Q: Schweser Satellites Inc. produces satellite earth stations that sell for $100,000 each. The firm's…
A: Dear student, below is the answer to your assignment: Part 2: Explanation:Step 1: Calculate the…
Q: Bhupatbhai
A: Unfortunately, the phrase "25 percent What's the opening?" doesn't provide enough context to…
Q: You've observed the following returns on Pine Computer's stock over the past five years -24.6…
A: 1. Calculate the average real risk-free rate:The average T-bill rate over the period was 4.3%The…
Q: Discuss the merits of the following statement: Inside directors should constitute the majority of a…
A: Title: The Role of Inside Directors in Corporate Boards: Balancing Insider Knowledge and External…
Q: If Carissa Dalton has a $410,000 home insured for $320,000, based on the 80 percent coinsurance…
A: Calculation of amount paid by insurance company;Given, Value of home = $410,000 Insurance coverage…
Q: None
A: Income Tax Burden for Toto Inc.Here's the breakdown of the income tax burden for Toto Inc. in each…
Q: Whitehaven Group Ltd (WHG) is an industrial machinery manufacturing company based in Sydney. Due to…
A: Net Present Value (NPV) is a financial metric that measures the profitability of an investment or…
Q: None
A: Step 1) Calculation of accumulated Value of Cash Flows at the end of Year 4YearCash Flows12.25 %…
Q: You are more than half way throught this class. What knowledge have you gained? Do you see yourself…
A: Approach to solving the question: Detailed explanation: Examples: Key references:
Q: Finance Would you rather borrow at the federal funds market than from the discount window if your…
A: Federal funds market:The federal funds market serves as a vital component of the U.S. financial…
Q: Caspian Sea Drinks is considering the production of a diet drink. The expansion of the plant and the…
A: Step 1: Calculate Annual Cash FlowsA. Annual RevenuesThe company will generate annual revenues of…
Q: Jeff bought an annuity immediate for $45.24. This annuity immediate is designed such that payments…
A: Annuity refers to a situation where a cash flow sequence occurs, and this could be either in…
Q: None
A: Step 1: Given Value for Calculation Value of Tesla Stock = vt = $6000Value of McDonald Stock = vm =…
Q: Growth Option: Option Analysis Fethe's Funny Hats is considering selling trademarked, orange-haired…
A: Fethe's Funny Hats - Growth Option Analysisa. Expected NPV of the ProjectCash Flows:Initial…
Q: Finance which of the following statements on consumption-based asset pricing are correct? 1. The…
A: Asset pricing is the process of determining the value of financial assets such as stocks, bonds, and…
Q: What is the weighted average cost of capital for SKYE Corporation given the following information?…
A: Value of Equity =Equity shares outstanding ∗ Stock price per share=1million×$23=$23million Value of…
Q: None
A: Part 2: Explanation:Step 1: Calculate the weighted cost of each source of financing.\[ Weighted\…
Q: Problem 5-14 Suppose Capital One is advertising a 60-month, 5.99% APR motorcycle loan. If you need…
A: 1. Monthly Interest Rate (Cell D11):Formula: =B11/B12Explanation:Cell B11 contains the APR…
Q: QUESTION 3 You start to plan a big project. The initial purchase of the land and materials will cost…
A: The objective of the question is to calculate the Net Present Value (NPV) of the project at…
Q: K One year ago, your company purchased a machine used in manufacturing for $110,000. You have…
A: Approach to solving the question: For better clarity of the solution, I have provided the…
Q: Baghiben
A: Compute NPV as follows:Formulas:
Q: Suppose that a 20-year bond with a coupon rate of 12% is selling at its par value of $100,000. Also…
A: 1. Calculate the Dirty Price:Since the bond is selling at par value ($100,000), we don't need to…
Q: Brummitt Corp., is evaluating a new 4 - year project. The equipment necessary for the project will…
A: Step 1: The calculation of the after-salvage value AB1Equipment cost $ 2,950,000.00 2Sales value $…
Q: am. 112.
A: The objective of the question is to calculate the weighted average cost of capital (WACC) for…
Q: You are a market-maker working at a large broker-dealer in the FX spot market. You are responsible…
A: In the foreign exchange (FX) spot market, market-makers play a crucial role by providing liquidity…
Q: f1
A: Step 1: Determine the number of days for each outstanding balances.June 1 to June 2 = 2 daysJune 3…
Q: Check my work 10 percent. Thirty thousand dollars in out-of-pocket costs will be incurred. For a…
A: Net Amount to Lenders:This is the initial amount available after out-of-pocket costs: $1,000,000…
Q: Apple Inc. issued AAPL stock. The stock has a face value of $30. The company currently pays a…
A: Step 1: Given value for Calculation Current Dividend = d0 = $3.6Growth Rate = g = 10%Required Rate…
Q: PART A: Most Valuable Potatoes (MVP) is bidding to take over Tomatoes Kale Operators (TKO). MVP has…
A:
Q: 3. Shondra wishes to accumulate a college fund for her daughter by making 17 equal annual deposits…
A: Option c: This option is correct because:The correct answer is at least $2,400 but less than $2,600…
Q: Answer is all option
A: Option c, "lower overall costs," is the most appropriate choice as the potential big advantage for a…
Q: None
A:
Q: Baghiben
A: Approach to solving the question: Detailed explanation: Examples: Key references:
Q: Your boss, the chief financial officer (CFO) for Dream Analytics Inc., has just handed you the…
A: Let's explore each question in greater detail:The act of examining and assessing possible investment…
Q: Question #1 What are the total revenues for Property 1? Question #2 What are the revenues for…
A: "Since you have posted a question with multiple sub parts, we will provide the solution only to the…
Q: You need to estimate the value of Laputa Aviation. You have the following forecasts (in millions of…
A: To estimate the total value of Laputa Aviation and the value of its equity, we can use the…
Q: None
A: Approach to solving the question: For better clarity of the solution, I have provided the…
Q: Find the equated date at which the original payments are equivalent to the single payment. State…
A:
Q: is this accurate
A: PI > 1: This means that the present value of future cash flows is greater than the initial…
Q: You plan to purchase a rented house which you could rent to earn you an annual income of $12,000.…
A: Years Cashflows PV factor PV = CF * PV factor 1 9000 0.847 $7,627.12 2 9000 0.718 $6,463.66 3 9000…
Q: Nikul
A: Part 2: Explanation:Step 1: Calculate the time to expiration for each subperiod.Step 2: Use the…
Q: 5 Gaucho Services starts life with all-equity financing and a cost of equity of 13%. Suppose it…
A: Part 2: Explanation:Step 1: Calculate the new cost of equity using MM's Proposition 2.MM's…
Q: The current yield curve for default-free zero-coupon bonds is as follows: Maturity (Years) Spot…
A: A bond provides the issuing company access to debt capital from investors and other non-traditional…
Q: 1) ABC’s current stock price is $24.20 and had an PES OF $2.20. Calculate the ABC’s P/E multiple.…
A: 1) Calculating ABC's P/E multiple:The P/E (Price-to-Earnings) multiple is calculated as the stock…
Q: X tal assets of $5,000 and the following the coming year: Firm A Unlevered Economy Bad Average Good…
A: Step 1:To find the standard deviation of the new ROE distribution after the firm issues $2,000 of…
provide answer with calculation and provide correct and incorrect option explanation
Step by step
Solved in 2 steps
- The loan payment (principal plus interest) is $4,475 per year. The present value interest factor for a 5-year annuity at 15%: $15,000 / 3.3522. The $5,000 salvage value is a reduction to the cost of owning and results in an after tax cost of owning the equipment of $5,197. EXERCISE 14: PURCHASE VERSUS LEASE CALCULATION Hull Manufacturing Co. must decide whether to purchase or lease a new piece of equipment. The equipment can be leased for $4,000 a year or purchased for $15,000. The lease includes maintenance and service. The salvage value of the equipment at the end of five years is $5,000. If the equipment is owned, service and maintenance charges (a tax-deductible cost) would be $900 a year. The firm can borrow the entire amount at a rate of 15% if they buy. The tax rate is 50%. Which method of financing would you choose? Use the following capital cost allowance amounts. Year Amount 1 $4,500 3,150 2,205 1,543 1,081 3 4 5COL Inc. can either purchase an equipment for $650,000 or lease it from LEN Inc. by making 12 annual lease payments (paid at the beginning of the year) of $89,600. The equipment has CCA rate of 20% and will have salvage value of $56,000 at the end of year 12. Assume this asset is the only asset in the asset class for both companies. LEN’s borrowing cost is 11% which is 1% lower than COL’s. COL and LEN have tax rate of 15% and 40% respectively. a) Calculate the NPV of leasing for COL. b) Calculate the NPV of leasing for LEN. c) Calculate the maximum and minimum annual lease payment acceptable to COL and LEN respectively.Bird Wing Bedding can lease an asset for 4 years with payments of $24,000 due at the beginning of the year. The firm can borrow at a 9% rate and pays a 25% federal-plus-state tax rate. The lease qualifies as a tax-oriented lease. What is the cost of leasing? Do not round intermediate calculations. Round your answer to the nearest dollar.
- A Machine costs $20,000 and can be depreciated over its useful life of 5 years. The Machine can be leased for an annual rate of 5000. For both the lessor and lessee, the tax rate is 21% and the interest rate is 9%. A: What is the depreciation Tax Shield? (20,000/5) *.21 = $840 B. What is the after-tax cost of the lease program? (5000) *(1-.21) = $3950 C. What are the total cash flows from leasing? = OCF = 840+3950 = $4790 D. What is the after-tax cost of debt? .09*(1-.21) = .0711 = 7.11% E. What is the net advantage of leasing for the lessee? F. What is the net advantage of leasing for the Lessor? G. What lease payment would make the deal equally desirable for both the lessee and the lessor? I need E, F and G I put in other answers for contextThe company buys a solar panel unit for P105,000. The shipping and installation fees amount to P15,000. If the unit is expected to last for 15 years, with a salvage value of P3,000, what is the depreciation charge during the 12 th year, and the book value at the end of 14 years by the (a) Declining balance method, (b) DDB method, (c) sinking fund method g iven interest rate at 12.5 percent, and (d) Sum-of-the-Years Digit (SYD) Method.Wildhorse Inc. is considering leasing a car from Jackie Inc. for a period of four years. The fair value of the car today is $39,500. The current market interest rate for financing such a vehicle is 4% compounded semi-annually. Below is a time diagram of this situation. Present Value PV-OA $39,500 Pmt=? ? Interest Rate ✓= 2% ? 3 5 Number of Periods n=8 Semi-annual lease payment 7 8 Calculate the semi-annual lease payment assuming that the payment is made at the end of the period. (Round answer to 2 decimal places, e.g. 5,275.25.)
- The Olsen Company has decided to acquire a new truck. One alternativeis to lease the truck on a 4-year contract for a lease payment of $10,000 per year, withpayments to be made at the beginning of each year. The lease would include maintenance.Alternatively, Olsen could purchase the truck outright for $40,000, financing with a bankloan for the net purchase price, amortized over a 4-year period at an interest rate of 10%per year, payments to be made at the end of each year. Under the borrow-to-purchasearrangement, Olsen would have to maintain the truck at a cost of $1,000 per year, payableat year-end. The truck falls into the MACRS 3-year class. The applicable MACRS depreciationrates are 33%, 45%, 15%, and 7%. The truck has a salvage value of $10,000, which is theexpected market value after 4 years, at which time Olsen plans to replace the truck regardlessof whether the firm leases the truck or purchases it. Olsen has a federal-plus-state taxrate of 40%.a. What is Olsen’s PV cost of…Contech (lessee) wishes to lease a printing press valued at $60,000 from Wrenn Capital (lessor) for a period of 4 years. Wrenn expects to depreciate the asset on a straight-line basis to a salvage value of $0. Actual salvage value is expected to be $8,000 at the end of 4 years. If Wrenn requires a 12% after-tax rate of return on the lease, what is the lessor's amount to be amortized? Assume Wrenn's marginal tax rate is 40%. $60,000 $38,725 $41,778 $36,690leasing new equipment. The lease terms include five aritual payments of $4,800 with the first at the would cost to buy and would 8 be depreciated straight line to a zero salvage value over 5 years. The firm can borow at a rate of 5.5 percent and has a tax rate of 21 percent. What is the cash flow from leasing relative to purchasing in Year of 40 Mutiple Choice O O O O $21700 $16.353 $30.145 $20.700 $25.500
- BLCK PNK is deciding to purchase or lease an automatic casting machine that will cost 15000, to be depreciated straight-line basis over a 5-year period. tax=50%. actual expected salvage value is 2100. maintenance & insurance expenses= 1000. todd co can borrow funds at before-tax rate of 8%. lease details: lease payment = 4200 required: (39)PV of cost of owning, (40)PV of cost of leasing, NAL, and decisionCassandra Company decides to enter the leasing business. The entity acquires a specialized packaging machine for P3,000,000 cash and leases it for a period of 6 years after which the machine is to be returned to Cassandra Company for disposition. The guaranteed residual value of the machine is P200,000. The lease term is arranged so that a return of 12% is earned by Cassandra Company. 1. What is the annual rental payable in advance required to yield the desired return?Q. XYZ Builders need to acquire the use of a crane for construction business, and are considering buying or leasing a crane. The crane costs Rs. 1,000,000, and is subject to the straight-line method of depreciation to a zero salvage value at the end of 5 years. In contrast, the lease rent is Rs 220,000 per year to be paid at the end each year for 5 years. XYZ Builders can raise debt at 14% payable in equal annual instalments, each instalment due at the end of the year. The company is in the 50% tax bracket. Should it lease or buy the crane? kindly solve this