The Bluejay Apartments, a new development, is in the process of structuring its lease agreements. The company would like to set the damage deposits high enough that tenants will keep the apartments in good condition. The company is actually more concerned about damage than about tenants not paying their rent. a.  Indicate the tax effects of the following alternatives: $1,000 damage deposit with no rent prepayment.   $500 damage deposit and $500 rent for the final month of the lease.   $1,000 rent for the final two months of the lease and no damage deposit.

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Mr. XYZ is an entrepreneur who is contemplating to buy a machine to increase the capacity of his manufacturing operations, He consults you for advise on the alternatives of leasing or buying the equipment. If purchased, the straight line depreciation expense will be P 18,700 annually over its life of 5 years. The annual lease payments will amount to P 29,000 payable at the beginning of each of the 5 years. Cost of money is 18%. Tax rate is 35%. There is no salvage value. Present value of P 1 received annually for 5 years at 18% is 3,127. Present value of P1 due in 5 years at 18% is .437. The amount of annual lease payment wherein Mr. XYZ will be indifferent between buying and leasing the machine is?

A company is considering leasing a new equipment. The lease lasts for 5 years. The lease calls for 5 payments of $58,000 per year with the first payment occurring immediately. The equipment would cost $250,000 to buy and would be straight-line depreciated to a zero salvage value over 5 years. The actual salvage value is negligible because of technological obsolescence. The firm can borrow at a rate of 6%. The corporate tax rate is 24 percent. What is the after-tax cash flow from leasing relative to the after-tax cash flow from purchasing in year 0? A)$203,600 B)$204,180 C)$204,760 D)$205,340 E)$205,920   Please answer without AI solution

Sheridan Company leased an office under a six-year contract, which has been accounted for as an operating lease. Faced with the downturn in the economy, the viable company decided to sub-lease the office. However, they have had no luck with this effort and the landlord will not allow the lease to be cancelled. The payments are $29000 per year and there are five years left on the lease. The company's most recent interest rate for financing from a bank is 11%. The risk-free rate on government bonds is 7%. What is the provision for the lease under IFRS?

An electric company must decide between two options for managing the blowdown water from its cooling tower. Option 1 is to continue the lease on 50 acres of land for another 5-year period and dispose of the water by spray irrigation. The landowner will move the pipe around as necessary and maintain the spray nozzles and valves. The previous lease cost $125,000 per year with payments due midway through each year. Now the landowner will require beginning of year payments of $180,000 each year. Option 2, which releases the 50 acre tract of land, involves purchasing a treatment system that will allow the recycling of most of the blowdown water. This system will have an initial cost of $1,600,000 and an AOC of $58,000 per year. However, the company will save $220,000 per year because it will not have to purchase as much make-up water as with option 1. At the end of 5 years, the company will be able to sell the equipment back to the local equipment supplier for 30% of the first cost. If the…

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King Cones leased ice cream-making equipment from Ace Leasing. Ace earns interest under such arrangements at a 4% annual rate. The lease term is five-months with monthly payments of $13,500 due at the end of each month. King Cones elected the short-term lease option. What is the effect of the lease on King Cones' earnings during the five-month term (ignore taxes)? (Enter your answer as a positive value.)