Lease or buy, Financial Accounting

La Favorite Pastry Shop has been in business since 1985 and started with a large commercial
oven that was built in 1955. Max, the owner is debating whether or not to purchase a new oven at
a cost of $125,000 with bank financing at 7%, or he can choose to lease the oven over a 15 year
period with annual lease payments of $13,000 with the first payment due on inception of the
lease. In either case, Max expects the new oven to have a useful life of 15 years. The company’s
marginal tax rate is 23%, the asset is a class 30 asset with a CCA rate of 30%.
Max has asked you, a good friend and a CMA to help assess the alternatives.
Determine whether or not the machine should be purchased or leased. You must recommend a
clear alternative and support your recommendation quantitatively and qualitatively by including
advantages/disadvantages of each.
Posted Date: 9/14/2012 5:06:26 PM | Location : United States







Related Discussions:- Lease or buy, Assignment Help, Ask Question on Lease or buy, Get Answer, Expert's Help, Lease or buy Discussions

Write discussion on Lease or buy
Your posts are moderated
Related Questions
SECTION B QUESTION 2: Two companies Juk Ltd and Roop Ltd operate in the tourism sector. Financial forecasts are provided below: Income Statement for yea

Final accounts 1) Examination questions – two types of problems arise in examinations: transfers between head office and branch are made at cost; or Transfers bet

My trial balance is off by $304 and I can''t find my error

Choose a share from a market such as LSE, NYSE, NASDAQ, etc. [Data sources could be Datastream, Google Finance or others]. Prepare a report which involves the following aspects: -

PROTECTIVE TRUSTS The income of property may be settled on such terms as to restrict its availability to creditors of the beneficiary in the following ways: (a) Determinable

Retained Earnings had a beginning balance of $2,758,000 and an ending balance of $3,885,700. Total revenues for the year were 3,790,800. During the year 130,300 in dividends were d

Illustration: Computation of retained profits acquisition Normal 0 false false false EN-US X-NONE X-NONE MicrosoftIn

What is the financial objective of a business A business is created to enhance wealth of its owners. This may come as a surprise, as there are other objectives which a business

I need to know how to do a problem and whether I am missing information.

Two items are omitted from each of the following summaries of balance sheet and income statement data for two corporations for the year 2014, Steven Craig and Georgia Enterprises.