What is the npv of the lease

Assignment Help Finance Basics
Reference no: EM13272302

Your firm is considering leasing a magic box. The lease lasts for three years. The lease calls for three payments of $1,350 per year with the first payment occurring at lease inception. The magic box would cost $3,600 to buy and would be straight-line depreciated to zero salvage value over three years. The firm can borrow at 6%, and the marginal corporate tax rate is 30%. What is the NPV of the lease?

Reference no: EM13272302

Questions Cloud

Explain tracers injected into the bloodstream for positron : Nitrogen-13 is used in tracers injected into the bloodstream for positron emission tomography (PET). The half-life of nitrogen-13 is 10.0 minutes. How much time is required for the activity of a sample of nitrogen-13 to fall to 14.2 percent of its..
Find what is the resistance of the new wire : A wire has a resistance of 29.7-ohm . It is melted down, and from the same volume of metal a new wire is made that is 4 times longer than the original wire. What is the resistance of the new wire
Determine the momentum of the base ball : In a science fiction movie, a 100 g base ball travelling with a speed of 60 m/s and an electron travelling at a speed of 1.2 x 10^7 m/s, determine the momentum of the base ball
An administered orally in the form of nai(aq) as a treatment : Iodine-131 is administered orally in the form of NaI(aq) as a treatment for thyroid cancer. The half-life of iodine-131 is 8.04 days. If you begin with 49.8 mg of this isotope, what mass remains after 13.4 days have passed
What is the npv of the lease : The magic box would cost $3,600 to buy and would be straight-line depreciated to zero salvage value over three years. The firm can borrow at 6%, and the marginal corporate tax rate is 30%. What is the NPV of the lease?
Briefly describe what happens in foreign exchange markets : Briefly describe what happens in foreign exchange markets. The spot Yen/$US exchange rate is Yen119.795/$US, and the one-year forward rate is Yen114.571/$US. If the annual interest rate on dollar CDs is 6%, what annual interest rate would you expe..
What would the gain be if the source was connected directly : A 10-mV signal source having an internal resistance of 200 kO is connected to an amplifier for which the input resistance is 20 kO, the open-circuit voltage gain is 2000 V/V, and the output resistance is 1 kO. The amplifier is connected in turn to..
Find the buoyant force for the two objects : Find the buoyant force for the two objects when they are placed into water, Next, find the percent difference between the two buoyant forces
State all the ionic species present : List all the ionic species present (before any reaction occurs) when the following solutions are mixed together

Reviews

Write a Review

Finance Basics Questions & Answers

  Calculate the equity capital ratio

If $2 million in bad loans were removed from the bank's assests, show how the equity capital ratio would change.

  What is the estimated value of the stock

A stock has the required rate of return at 16%. The most recent dividend paid D0 = $2.00 and the expected dividend growth rate g = 10%. What's the first dividend expected to pay at the end of this year?

  Explain what choices a student can make to reduce

Explain/highlight areas where you felt compelled to borrow more to cover expenses or managed to trim back your borrowed amounts

  Calculation of after tax return

The Omega Company has some excess cash that it would like to invest in marketable securities for a long-term hold. Its vice-president of finance is planning three investments

  What will the annual percentage rate for this financing

Currently the company has no funds on deposit with the bank and will need the loan to cover the compensating balance as well as their financing needs. What will the annual percentage rate (APR) for this financing?

  Determination of optimal economic life

The Scampini Supplies Corporation recently purchased a new delivery truck. The new truck cost $22,500, and it is expected to create net after-tax operating cash flows, including depreciation, of $6,250 each year.

  Computing future value of given stock

A company has announced growth rate of its dividend going forward will be 2% annually forever. The dividend in year 4 will be $3.00. The discount rate on the stock is 10%. What will stock price be in year 18?

  Compute the firm price-earnings ratio

Reagan Corp. has reported a net income of $805,700 for the year. The company's share price is $13.19, and the company has 318,290 shares outstanding. Compute the firm's price-earnings ratio.

  Explain what maximizing shareholder wealth is all about

In your own words, explain what maximizing shareholder wealth is all about. What is or was the most difficult concept to grasp throughout the course? What opinion whould you give to someone who is interested in maximaxing their wealth as a shareho..

  What is the unlevered value of monopoly

What is the per share value of Monopoly to Best Value Corporation? Assume that Monopoly now has $10.82 million in debt.

  Capital market instruments

Insert the following items in the appropriate section of the Statement of Cash Flows and indicate whether this increases or decreases cash flow:

  What is the value of the stock

if the required return declines to 9% and the dividend remains $1, what is the value of the stock? if the stock is selling foor $20, what does that imply?

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