Calculating cost of purchasing & prepare income, Finance Basics

The Jacobs company needs to acquire a new lift truck for transporting its final product to the warehouse.

One alternative is to purchase the truck for $45,000. Maintenance of the truck will be an annual cost of $1,200.  The truck falls into the 5-year MACRS classification and it has a salvage value of $10,000, which is the expected market value after 4 years, at which time Jacob plans to replace the truck, irrespective of whether it is purchased or leased.

Alternatively, Jacob could lease the truck under a four-year contract for a lease payment of $15,000 per year.  Each annual lease payment must be made at the beginning of the year.  This is an operating lease, so the truck would be maintained by the lessor (the leasing company).  

The Jacobs company has a marginal tax rate of 40% and a MARR of 15%.

a,  Prepare an Income for the "Buy" cost-only option.  
b.  Prepare Cash flow statement for the "Buy" option.  
c.  What is the present worth of the cost of purchasing the truck?

 

Posted Date: 2/14/2013 6:35:37 AM | Location : United States







Related Discussions:- Calculating cost of purchasing & prepare income, Assignment Help, Ask Question on Calculating cost of purchasing & prepare income, Get Answer, Expert's Help, Calculating cost of purchasing & prepare income Discussions

Write discussion on Calculating cost of purchasing & prepare income
Your posts are moderated
Related Questions
Type of Partners 1) Active Partner 2) Sleeping Partner 3) Quasi or Nominal Partner 4) Minor Partner 5) Major Partner 6) In-coming Partner 7) Out-going Partner

Imagine Joy is the project coordinator in a company where four projects are running concurrently. He's employed you as the senior business analyst to perform some financial calcula

Incentive Problem and Consumption of Perquisites Incentive Problem Managers may have fixed salary and they may have no incentive to work hard and maximize shareholders weal

What is the Execution of order in the Stock Exchange When broker receives the margin money and is clear about the order received by him, he puts details in the 'order book'.

Advantages of Investment in Shares 1. Income in form of dividends When you contain shares of a company then you become a part-owner of such company and hence you will be

I have a question regarding assignment help, once completed, will I receive the assignment via email?

Ask questioAustralian’s Speleological App Projectn #Minimum 100 words accepted#

Why are financial institutions heavily regulated, with specific focus on their ability to increase or reduce the money supply?

discuss the three approaches to the short -term financing problem and provide relevant examples of each.

Some of the policies decided by the proprietor are: 1) Time of operating the business 2) Promotion through advertising or special offers 3) Dealing with suppliers and cus