Piece of equipment costing and after-tax return on equipment

Assignment Help Financial Management
Reference no: EM13919705

Darling leasign is considering the lease to Major State University of a piece of equipment costing $100,000. The period of the lease will be 8 years. The equipment will be depreciated under MACRS rules for 7-year class assets. Darling's marginal tax rate is 40 percent. Annual (end-of-year) lease payments will be $20,000. Estimated salvage is $10,000. If Darling requires a 20 percent after-tax return on equipment it leases, should the lease be made?

Reference no: EM13919705

Questions Cloud

Does your markov process analysis support deans statement : Compute the probabilities that a sophomore will graduate and that a sophomore will drop out. Does your Markov process analysis support the dean's statement? Explain.
Freely floating exchange rate system : Under the so called "freely floating exchange rate system,"
Compute the percentage total return : Suppose a stock had an initial price of $59 per share, paid a dividend of $1.5 per share during the year, and had an ending share price of $67. Compute the percentage total return.
What are some of the advantages of using lean manufacturing : Layout decisions can greatly impact productivity, costs, safety, and quality. What are the 3 main types of layouts? Briefly describe each type and explain some of the advantages and disadvantages associated with each type. How can the layout help ..
Piece of equipment costing and after-tax return on equipment : Darling leasign is considering the lease to Major State University of a piece of equipment costing $100,000. The period of the lease will be 8 years. The equipment will be depreciated under MACRS rules for 7-year class assets. Darling's marginal tax ..
Adopting a working game of ping pong in java : Create a new Java project. You will be porting each of the classes from the example code to swing, so its better to code in empty class and fill in the details - Object-Oriented Design in Java
Significant differences among the three treatment means : The following data summarize the results from an independent-measures study comparing three treatment conditions.
What is the bonds conversion ratio and value : The following data apply to Saunders Corporation’s convertible bonds. What is the bond’s conversion ratio? What is the bond’s conversion value? What is the bond’s straight-debt value?
Measures electrical activity in brain : Sonal is at a brain research center, participating in a study. She is hooked up to a machine that measures electrical activity in her brain through the use of electrodes attached to her scalp. This description best characterizes which of the follo..

Reviews

Write a Review

Financial Management Questions & Answers

  Find the expected return and standard deviation of portfolio

Find the expected return and standard deviation of a portfolio that is invested 80% in Stock A and 20% in Stock B.

  Calculate arithmetic average returns for large-company stock

Suppose we have the following returns for large-company stocks and Treasury bills over a six year period: Year Large Company US Treasury Bill 1 4.00 4.62 2 14.49 4.96 3 19.33 3.88 4 –14.35 7.00 5 –31.84 5.38 6 37.04 6.43 a. Calculate the arithmetic a..

  Recognizing and discuss inferences and faulty logic

Identifying and applying useful data and information and demonstrate logic to interpret data - Recognizing and discuss inferences and faulty logic.

  An appropriate position for a hedge

Your bank owns adjustable rate mortgages (ARMs) that are priced at three month LIBOR plus 1 percent. There is an annual cap on the allowable rate increase equal to a maximum of 1 percent a year. Thus, if LIBOR rises by 3 percent, the bank can raise t..

  Compute the value of this stock with a required return

A firm is expected to pay a dividend of $2.35 next year and $2.65 the following year. Financial analysts believe the stock will be at their price target of $105 in two years. Compute the value of this stock with a required return of 11.3 percent.

  Retirement account rate

A 40-year-old individual establishes a retirement account that is expected to earn 7 percent annually. Contributions will be $2,000 annually at the beginning of each year. Initially, the saver expects to start drawing on the account at age 60.

  Assuming that stock market is efficient-receive full credit

Assuming that the stock market is efficient, is each of the following statements true or false (to receive full credit, you must explain why in two or three sentences or with an example)? The stock price of Company X doubled over the past year, the s..

  What is target capital structure-residual dividend policy

Global Inc. has its own target capital structure that consists of debt and equity. The firm anticipates that its capital budget for the next year will be $1,500,000. If it reports net income of $1,200,000 and wants to maintain a 20% payout ratio, wha..

  Use straight-line depreciation to zero over projects life

You are evaluating two different silicon wafer milling machines. The Techron I costs $249,000, has a three-year life, and has pretax operating costs of $66,000 per year. The Techron II costs $435,000, has a five-year life, and has pretax operating co..

  Discounting models or non time value of money models

Which models have the greatest following, discounting models (like IRR and NPV) or non time value of money models (like payback and accounting rate of return)?

  Considering purchasing new machine

Builtrite is considering purchasing a new machine that would cost $60,000 and the machine would be depreciated (straight line) down to $0 over its five year life. At the end of five years it is believed that the machine could be sold for $15,000. The..

  Nowc and dcf analysisnbspthe comstock corporation is

nowc and dcf analysisnbspthe comstock corporation is considering investing in a new floor mat manufacturing machine

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