What are the nal and irr of the lease

Assignment Help Financial Management
Reference no: EM13502344

HealthPlan Northwest must install a new $1 million computer to track patient records in its three service areas. It plans to use the computer for only three years, at which time a brand new system will be acquired that will handle both billing and patient records. The company can obtain a 10 percent bank loan to buy the computer or it can lease the computer for three years. Assume that the following facts apply to the decision:The computer falls into the three-year class for tax depreciation,so the MACRS allowances are 0.33, 0.45, 0.15, and 0.07 in Years1 through 4, respectively.The company's marginal tax rate is 34 percent.Tentative lease terms call for payments of $320,000 at the end of each year.The best estimate for the value of the computer after three years of wear and tear is $200,000.a. What are the NAL and IRR of the lease? Interpret each value.b. Assume now that the bank loan would cost 15 percent, but all other facts remain the same. What is the new NAL? The new IRR?

Reference no: EM13502344

Questions Cloud

Determine the combined mass of this canoe and rider : Two canoes are tied together and traveling down a river with the current. Spotting a waterfall, the two canoeists cut the rope, What is the combined mass of this canoe and rider
Value on the ownership position in briarwood hospital : What impact would change have on the equity value of the business and what if the growth rate were only 2 percent?
Explain the molar equilibrium constant is found : You place 25 moles of a monomer in a flask. It equilibrates to form a dimer by the following reaction. The molar equilibrium constant is found to be 3.5. monomer ( ) dimer or restated 2A ( )A2, What are the concentrations of the monomer and dimer i..
Strategic plan : Strategic plan
What are the nal and irr of the lease : Interpret each value.b. Assume now that the bank loan would cost 15 percent, but all other facts remain the same. What is the new NAL? The new IRR?
Explain what is the ph of sodium phenolate : What is the pH of 0.185M sodium phenolate (C6H5ONa), the sodium salt of phenol (Ka= 1.0 X 10-10)
Health leadership competency model : Health Leadership Competency Model
Determine the ph during the titration of triethylmine : Find the pH during the titration of 20.00mL of 0.1000M triethylmine, Kb=5.2x10^-4, with 0.1000M HCl solution after the addition of 10.00mL of titrant
What is the new nal : What are the NAL and IRR of the lease and interpret each value - Assume now that the salvage value estimate is $300,000, but all other facts remain the same. What is the new NAL? The new IRR?

Reviews

Write a Review

Financial Management Questions & Answers

  Determine the short run profit-maximizing price

Determine the short run profit-maximizing price

  Finance the expansion of operations

Finance the expansion of operations, and financial institutions issue them to raise funds for lending to households and corporations - major events that affect the risk of these securities and that of my prior statements

  Determine how large must each of the 5 payments be

To get the money for this payment, you will make 5 equal deposits, beginning today and for the following 4 quarters, in a bank that pays a nominal interest rate of 8% with quarterly compounding.

  There can be a good strategy with a bad product and a good

there can be a good strategy with a bad product and a good product with a bad strategy and this can impact product or

  1 buckeye corp is currently an all-equity firm with a

1. buckeye corp. is currently an all-equity firm with a market value of equity of 100 million. the current expected

  Who is responsible for the make-or-buy decision

Who is responsible for the make-or-buy decision and what other suggestions can you make for improving the situation at Donley Brothers

  Purchasing and procurement management

Do you feel that the fixed price contract agreed to by FRC was the best way to procure ACME's computer system and where did FRC go wrong in purchasing the software system

  Assume the market price of a 5-year bond for margaret inc

assume the market price of a 5-year bond for margaret inc. is 900 and it has a par value of 1000. the bond has an

  1 fhc inc a us corporation has an account payable due in 90

1 fhc inc. a u.s. corporation has an account payable due in 90 days. use the following information to evaluate the

  1 the tiger company has an opportunity to make an

1 the tiger company has an opportunity to make an investment with the following estimated after tax cash flows-year

  A critical assessment of the capital asset pricing model

a critical assessment of the capital asset pricing model capmyou are required todescribe the capital asset pricing

  Describe a fictitious company and provided its background

describe a fictitious company and provided its background. then you are ready to start building the marketing plan with

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