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NetFive Inc. is considering a leasing arrangement to finance some manufacturing equipment’s that is need for the next 3 years. The equipment’s will be obsolete and worthless after3 years. The firm will depreciate the cost of the equipment’s on the straight-line basis over their 3-years life. It can borrow $4,800,000 the purchase price, at 10% and buy the equipment’s, or it can make 3 equal end-of –year lease payments of $2,100,000 each and lease them. The loan obtained from the bank is a 3-year simple interest loan, with interest paid at the end of the year. The firm’s tax rate is 40%. Annual maintenance costs associated with ownership are estimated at $240,000, but this cost would be borne by the lessor if it leases.
What is the net advantage to leasing (NAL)? Show work please
You have the following bond: $1000 Par, 22 years to maturity, Mkt rate of 9.75%, coupon of 10.25%, compounded semi-annually. The PV of the bond is $1044.97. What contribution to this $1044.97 does the coupon payment 27 periods from today make to this..
Assessing key ratios of the industry is an example of
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