Piece of equipment costing and after-tax return on equipment

Assignment Help Financial Management
Reference no: EM13919705

Darling leasign is considering the lease to Major State University of a piece of equipment costing $100,000. The period of the lease will be 8 years. The equipment will be depreciated under MACRS rules for 7-year class assets. Darling's marginal tax rate is 40 percent. Annual (end-of-year) lease payments will be $20,000. Estimated salvage is $10,000. If Darling requires a 20 percent after-tax return on equipment it leases, should the lease be made?

Reference no: EM13919705

Questions Cloud

Does your markov process analysis support deans statement : Compute the probabilities that a sophomore will graduate and that a sophomore will drop out. Does your Markov process analysis support the dean's statement? Explain.
Freely floating exchange rate system : Under the so called "freely floating exchange rate system,"
Compute the percentage total return : Suppose a stock had an initial price of $59 per share, paid a dividend of $1.5 per share during the year, and had an ending share price of $67. Compute the percentage total return.
What are some of the advantages of using lean manufacturing : Layout decisions can greatly impact productivity, costs, safety, and quality. What are the 3 main types of layouts? Briefly describe each type and explain some of the advantages and disadvantages associated with each type. How can the layout help ..
Piece of equipment costing and after-tax return on equipment : Darling leasign is considering the lease to Major State University of a piece of equipment costing $100,000. The period of the lease will be 8 years. The equipment will be depreciated under MACRS rules for 7-year class assets. Darling's marginal tax ..
Adopting a working game of ping pong in java : Create a new Java project. You will be porting each of the classes from the example code to swing, so its better to code in empty class and fill in the details - Object-Oriented Design in Java
Significant differences among the three treatment means : The following data summarize the results from an independent-measures study comparing three treatment conditions.
What is the bonds conversion ratio and value : The following data apply to Saunders Corporation’s convertible bonds. What is the bond’s conversion ratio? What is the bond’s conversion value? What is the bond’s straight-debt value?
Measures electrical activity in brain : Sonal is at a brain research center, participating in a study. She is hooked up to a machine that measures electrical activity in her brain through the use of electrodes attached to her scalp. This description best characterizes which of the follo..

Reviews

Write a Review

 

Financial Management Questions & Answers

  How much do you need to pay off this debt

You owe $10,000 to a credit card company. Your credit card debt is 127 days overdue after the grace period. The interest rate is 19%. How much do you need to pay off this debt?

  Companys stock plots the security market line

A company's stock plots below the security market line. This means the company is ______

  Explain why NPV is preferred over IRR

Explain why NPV is preferred over IRR if there is a conflict between the two methods in the selection of projects

  Assume that the pure expectations theory

Suppose the interest rate on a 1-year T-bond is 5.00% and that on a 2-year T-bond is 5.40%. Assume that the pure expectations theory is NOT valid, and the MRP is zero for a 1-year T-bond but 0.40% for a 2-year bond. What is the yield on a 1-year T-bo..

  About the bonus versus stock

The company has offered you a $5,000 bonus, which you may receive today, or 100 shares of the company’s stock, which has a current stock price of $50 per share. Mathematically, what is the best choice? Why? What are the advantages and disadvantages o..

  Which model is more cost effective

Equivalent Annual Annuity. Econo-Cool Air conditioners cost $300 to purchase, result in electricity bills of $150 per year, and last for 5 years. Luxury Air models cost $500, result in electricity bills of $100 per year and last for 8 years. The disc..

  Define moderately strenuous job responsibilities

If I purchase a policy that pays a fixed benefit of 90% of my current salary, how long will it be before this amount covers only 70% of my future salary if I assume salary increases of 4% per year?

  How much of that contribution is tax deductible

Gene and Dixie, husband and wife (ages 45 and 42), both work. They have an adjusted gross income of $50,000 in 2012, and they are filing a joint income tax return. Both have an employer-provided retirement plan at work. What is the maximum IRA contri..

  Ability to be persuasive in a workplace document

Which of the following is NOT a category of constraints on your ability to be persuasive in a workplace document?

  What is the amount to use as the annual sales figure

Winnebagel Corp. currently sells 29,600 motor homes per year at $81,000 each and 8,600 luxury motor coaches per year at $123,000 each. The company wants to introduce a new portable camper to fill out its product line; it hopes to sell 24,600 of these..

  Explain collateral and conditions

The five Cs of credit are character, capacity, capital, collateral, and conditions. Review each of the four items mentioned in the article and then state which one of the Cs each would represent.

  Modified duration and the capital gains formula method

A bond with 3 years remaining to maturity has an annual coupon rate of 8.5%, and a face value of $1,000. If interest rates fall 0.15% from the given YTM, by what percent will the bond change in value? Show these 2 ways (using modified duration and th..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd