National Motors Company advertised three alternatives for a 17-month lease on a new Tahoe: (1) zero dollars down and a lease payment of $2,100 per month for 17 months, (2) $6,800 down and $1,850 per month for 17 months, or (3) $42,500 down and no payments for 17 months. (Table B.1, Table B.2, Table B.3, and Table B.4) Note: Use appropriate factor(s) from the tables provided. Calculate the total present value of lease payments under the three alternatives (assume the annual interest rate is 12% compounded monthly). Option 1 Down Payment Monthly Payments Total Present Value Option 2 Down Payment Monthly Payments Total Present Value Option 3 Down Payment Total Present Value n = i = Table Value 1.0000 1.0000 Amount Present Value 1.0000 $ Table Value Amount Present Value 0 0 Table Value Amount Present Value

4. Two mutually exclusive battery systems A and B have been proposed to provide standby power for you plant. These two systems have different useful lives and repeatability cannot be assumed. If the analysis period is 6 years. After the useful life of battery system A is over, and a battery system can be leased for $75,000 per year for 3 years payable at the beginning of the lease. Which battery system would you recommend if the company's hurdle rate is 20% A Project $100,000 $4,000 З years $25,000 $240,000 $6,500 6 years $20,000 Initial Cost Annual Maintenance Useful life Market Value at end of useful life

A company is considering two alternatives with regards to equipment which it needs. The alternatives are as follows: Alternative A:PurchaseCost of Equipment 700,581Salvage Value 105,896Daily operating cost 534Economic life, years 10 Alternative B: Rental at 1,539 per day. At 18% interest, how many days per year must the equipment be in use if Alternative A is to be chosen.

Continuing with the example 4.8, once Cesar had selected generator 2 to purchase, he approached the manufacturer with the concerns that the first cost was too high and the expected life was too short. He was offered a lease arrangement for 6 years with a $20,000 annual cost and an extra $20,000 payment in the first and last years to cover installation and removal costs. Determine if generator 2 or the lease arrangement is better at 12% per year.

A firm can lease a truck for 4 years at a cost of $38,000 annually. The lease includes maintenance. The firm can instead buy a truck at a cost of $88,000, with annual maintenance expenses of $18,000. The truck has no salvage value at the end of 4 years. What is the equivalent annual cost of buying and maintaining the truck if the discount rate is 10% Round your answer to the nearest dollar and report it without the $ symboli

A firm is considering whether to buy specialized equipment that would cost $200,000 and have annual costs of $15,000. After 5 years of operation, the equipment would have no salvage value. The same equipment can be leased for $50,000 per year (annual costs included in the lease), payable at the beginning of each year. If the firm uses an interest rate of 5% per year, the annual cost advantage of leasing over purchasing is nearest what value?           (a) $2494                                                                                                           (b) $8694                     (c) $11,200                     (d) $12,758

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…

Your company is trying to decide whether it should purchase a copier from Xerox or lease it. The copier has an expected life of 6 years, after which it has only marginal value (you can ignore any residual value). If you purchase it, the price is $145,000, payable now, and you would have to pay an annual service charge of $8,000. If you lease it, you would have an annual payment of $36,000 each year (for 6 years), which includes service. The lease payment and the annual service charge occur at the beginning of each year. The interest rate is 3.8%. Which option is least costly?

Genesco is considering two alternative 5-year leases. The first lease is for $2,080 per month for 60 months. The second lease has no rent for the first 9 months, and then even monthly payments for the remaining 51 months. The company uses a WACC of 12% (monthly discounting of 1% per month) to evaluate these types of situations. At what lease payment amount on the second lease would the company be indifferent between these two options? Your answer should be between 2000.00 and 3000.00, rounded to 2 decimal places, with no special characters.