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Automobiles are often leased, and several terms are unique to auto leases. Suppose you are considering leasing a car. The price you and the dealer agree on for the car is $30,500. This is the base capitalized cost. Other costs added to the capitalized cost price include the acquisition (bank) fee, insurance, or extended warranty. Assume these costs are $750. Capitalization cost reductions include any down payment, credit for trade-in, or dealer rebate. Assume you make a down payment of $2,000, and there is no trade-in or rebate. If you drive 12,000 miles per year, the lease-end residual value for this car will be $21,400 after three years. The lease or "money" factor, which is the interest rate on the loan, is the APR of the loan divided by 2,400. The lease factor the dealer quotes you is .00283. The monthly lease payment consists of three parts: a depreciation fee, a finance fee, and sales tax. The depreciation fee is the net capitalization cost minus the residual value, divided by the term of the lease. The net capitalization cost is the cost of the car minus any cost reductions plus any additional costs. The finance fee is the net capitalization cost plus the residual, times the money factor, and the monthly sales tax is the depreciation payment plus the finance fee, times the tax rate. What is your monthly lease payment for a 36-month lease if the sales tax is 7 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Muntjac Corporation's flexible budget cost formula for indirect materials, a variable cost, is $0.75 per unit of output. Assume that actual units produced equals standard units produced. If the company's performance report for last month shows a $250..
Calculate the bond equivalent yield and effective annual return on a jumbo CD that is 115 days from maturity and has a quoted nominal yield of 6.62 percent.
The Mallie Company has planned capital expenditures that total $2,000,000. The Mallie Company wants to maintain a target capital structure that is 35% debt and 65% equity. The Mallie Company forecasts that its net income this year will be $1,800,000...
You would like to sell a bond that is part of your investment portfolio. It has a face value of $1,000 and a coupon rate of 4% per year, with coupons being paid semi-annually. The next coupon payment is exactly two months from now. If the clean price..
What EAR (effective annual rate) is the bank is charging? What if they change compounding to bi-monthly?
Write down the advantages of investing through a mutual fund. Write a note on ‘Load structure'. Discuss rights of an investors in mutual fund.
A stock produced returns of 16 percent, 9 percent, and 21 percent over three of the past four years, respectively. The arithmetic average for the past four years is 10 percent. What is the standard deviation of the stock's returns for the four-year p..
Given this information, is triangular arbitrage possible? If so, explain the steps that would reflect triangular arbitrage, and compute the profit from this strategy if you had $1,000,000 to use. What market forces would occur to eliminate any furthe..
Apocalyptica Corp. pays a constant $7.85 dividend on its stock. The company will maintain this dividend for the next 12 years and will then cease paying dividends forever. If the required return on this stock is 9 percent, what is the current share p..
The market risk premium is 9.45 percent, and the risk-free rate is 4.87 percent. what is its beta?
Dinklage Corp. has 8 million shares of common stock outstanding. What are the company's capital structure weights on a book value basis?
Assume NEWC has an investment opportunity (similar to the air bag opportunity in Other People's Money).The firm can spend $325 Million on refurbishing its wire and cable plant to develop a product that will be sold in packets or units of twenty. Assu..
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