Diagnostic scanner-determine the after-tax cost of debt

Assignment Help Financial Management

Reference no: EM131604062

You work for a nuclear research laboratory that is contemplating leasing a diagnostic scanner (leasing is a very common practice with expensive, high-tech equipment). The scanner costs $6.3 million and it qualifies for a 30 percent CCA rate. Because of radiation contamination, it is valueless in four years. You can lease it for $1.875 million per year for four years. Assume that assets pool remains open and payments are made at the end of the year.

Assume the tax rate is 37 percent. You can borrow at 8 percent pre-tax. Should you lease or buy?

Determine the after-tax cost of debt, use the formula for PV of CCATS and then calculate NAL.

Reference no: EM131604062

Questions Cloud

Tax rate be for use in the calculation of the debt component : What would the appropriate tax rate be for use in the calculation of the debt component of LilyMac’s WACC?

Determine the after-tax cost of debt : Determine the after-tax cost of debt, use the formula for PV of CCATS and then calculate NAL.

Evaluate benefits and disadvantages of each data structure : Evaluate the benefits and disadvantages of each data structure. Remember that the data structure selection can have an impact in the performance achieved.

Maximum value of the product of the given two numbers : A differentiable function f with best possible bounds -1 = f(x) = 1 on the interval -4 = x = 4.

Diagnostic scanner-determine the after-tax cost of debt : You work for a nuclear research laboratory that is contemplating leasing a diagnostic scanner. Determine the after-tax cost of debt, use formula for PV of Ccats

What is the minimum value of their sum : The sum of three nonnegative numbers is 36, and one of the numbers is twice one of the other numbers. What is the maximum value of the product of these three.

Discuss a practical example of system engineering : Write a 1 to 2 page essay paper that discusses the topic below. Discuss a practical example of System Engineering.

Finding the values using calculus : For x > 0, find the x-value and the corresponding y value that maximizes y = 25 + 6x2 - x3, by Estimating the values from a graph of y.

Find the size of the fund at the end of seven years : Find the size of the fund at the end of 7 years, if the nominal rate of discount convertible quarterly is 4/41.

User Account

All Pages