The net present value of cash flows associated with the lease alternative

Question

Want to see the full answer?

Answer 1

Question

Chapter 12, Problem 25P

To determine

To compute:

The net present value of cash flows associated with the lease alternative

To determine

The alternative should the company accept − purchase of cars or lease alternative.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Asset Replacement An uninsured boat costing $98,000 was wrecked the first day it was used. It can be either sold as-is for $9,800 cash and replaced with a similar boat costing $100,000 or rebuilt for $83,000 and be brand new as far as operating characteristics and looks are concerned. Required: What is the difference in cost between the two options? Based on financial considerations, what should the company do? multiple choice Sell as-is for $9,800 cash and replace with a similar boat costing $100,000. Rebuild for $83,000.

Give typing answer with explanation and conclusion Your company is contemplating replacing their current fleet of delivery vehicles with Nissan NV vans. You will be replacing 5 fully-depreciated vans, which you think you can sell for $3,700 a piece and which you could probably use for another 2 years if you chose not to replace them. The NV vans will cost $36,000 each in the configuration you want them, and can be depreciated using MACRS over a 5-year life, but you are unable to make use of either bonus depreciation or Section 179 expensing. Expected yearly before-tax cash savings due to acquiring the new vans amounts to about $4,400 each. If your cost of capital is 12 percent and your firm faces a 21 percent tax rate, what will the cash flows for this project be? (Round your answers to the nearest dollar amount.)

1) A distribution company is considering three different alternatives to satisfy their customer's demands. Their options are to rent a ready distribution center (D01), Rent and mobilize a center (D02), or outsourcing (OS). The estimate for each method is shown. The lifetime for D01, D02, and OS are 2, 6, and 3 respectively. MARR is 0.08 per year. D01 D02 OS FIRST COST, $ 138,000 962,000 АОС, $ SV, $ 113,000 70,000 138,000 36,000 352,000 a) Draw the cash flow for all of alternatives. b) Which alternative will be selected on the basis of PW calculation? Why? c) If OS increases 20% each year, which alternative will be more economical (PW method)? d) Which alternative will be selected if AW method is used?

Answer 2

Question

Chapter 12, Problem 25P

To determine

To compute:

The net present value of cash flows associated with the lease alternative

To determine

The alternative should the company accept − purchase of cars or lease alternative.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 3

Question

Chapter 12, Problem 25P

To determine

To compute:

The net present value of cash flows associated with the lease alternative

To determine

The alternative should the company accept − purchase of cars or lease alternative.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 12, Problem 25P

To determine

To compute:

The net present value of cash flows associated with the lease alternative

To determine

The alternative should the company accept − purchase of cars or lease alternative.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 5

Chapter 12, Problem 25P

To determine

To compute:

The net present value of cash flows associated with the lease alternative

To determine

The alternative should the company accept − purchase of cars or lease alternative.

Answer 6

Chapter 12, Problem 25P

To determine

To compute:

The net present value of cash flows associated with the lease alternative

Answer 7

Chapter 12, Problem 25P

To determine

To compute:

The net present value of cash flows associated with the lease alternative

Answer 8

To determine

The alternative should the company accept − purchase of cars or lease alternative.

Answer 9

To determine

The alternative should the company accept − purchase of cars or lease alternative.

Answer 10

Expert Solution & Answer

Answer 11

Expert Solution & Answer

Answer 12

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 13

Ch. 12.A - Basic Present Value Concepts Annual cash inflows...Ch. 12.A - Basic Present value Concepts Julie has just...Ch. 12.A - Prob. 3E Ch. 12.A - Prob. 4E Ch. 12.A - Basic Present Value Concepts The Atlantic Medical...Ch. 12.A - Prob. 6E Ch. 12 - What is the difference between capital budgeting...Ch. 12 - Prob. 2Q Ch. 12 - Prob. 3Q Ch. 12 - Prob. 4Q

The net present value of cash flows associated with the lease alternative

Solution Summary: The author explains how to calculate the net present value of cash flows associated with the purchase of cars.

To compute:

The net present value of cash flows associated with the lease alternative

The alternative should the company accept − purchase of cars or lease alternative.

Want to see the full answer?

Chapter 12 Solutions

The net present value of cash flows associated with the lease alternative

Solution Summary: The author explains how to calculate the net present value of cash flows associated with the purchase of cars.

To compute: The net present value of cash flows associated with the lease alternative

The alternative should the company accept − purchase of cars or lease alternative.

Want to see the full answer?

Chapter 12 Solutions

To compute:

The net present value of cash flows associated with the lease alternative