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Maersk is negotiating to lease ten new cargo containers with GE Leasing. The firm has received an offer from BSL Containers for a total purchase price of $1,000,000. The terms of the lease include four payments of $270,000, with each payment occurring at the beginning of the year. An alternative to leasing is to borrow the money and buy the containers. The $1,000,000 amortized term loan for four years has an annual interest rate of 10%. Assume the trucks fall into the MACRS 3-year class and has an expected residual value of $100,000. The applicable depreciation rates are .3333, .4445, .1481 and .0741. Maintenance costs would be included in the lease. If the containers are purchased, a maintenance contract would be bought at the beginning of each year for $15,000 annually. Maersk plans to buy a new fleet of containers at the end of the fourth year. The firm has an effective tax rate of 21%.
a). What is Ace's present value of the cost of owning?
b.) What is Ace's present value of the cost of leasing?
c.) What is Ace's Net Advantage to Leasing (NAL)?
Suppose the yield on a two-year Treasury security is 5.83%, and the yield on a five-year Treasury security is 6.20%.
Gillette has declared that it will pay an annual dividend of $.65 one year from now. Analysts expect this dividend to grow at 12 percent per year thereafter through the fifth year.
1. By what amount will the market value of a Treasury bond futures contract change if interest rates rise from 5 to 5.25 percent? The underlying Treasury bond has a duration of 10.48 years and the Treasury bond futures contract is currently being ..
(a) What is the forward price of gold with delivery in 3 months? (b) Calculate the cost of a collar, with 3 months to delivery, where the strike of all options used is 1620.126. The annual standard deviation of the gold price is 20%.
scuba duba corporation produces a dive gear that is growing rapidly in popularity. the firm is not expected to pay a
The risk-free interest rates on dollars and yen are r Subscript $ Baseline equals 5.73 %r$=5.73% and r Subscript yen Baseline equals 1.35 %r¥=1.35%, respectively. Maryland is willing to assume that capital markets are internationally integrated. W..
It's been 2 months since you took a position as an assistant financial analyst at Caledonia Products. Although your boss has been pleased with your work, he is still a bit hesitant about unleashing you without supervision. Calculate the change in ..
Jake's Sound Systems has 210,000 shares of common stock outstanding at a market price of $36 a share. Last month, Jake's paid an annual dividend in the amount.
zr corporations stock has a beta coefficient equal to 1.8 and a required rate of return equal to 16 percent. if the
Carefree Leisure has a 40-day discount interest loan outstanding. The principal amount of the loan is $60,000, its quoted interest rate is 12 percent, and there is no compensating balance requirement. Compute the loan's APR and rEAR.
What is the value of the vacant land, assuming that building construction will take place immediately or one year from now? What is the best building alternative?
You bought the contract during the day at 2010, and had to put up initial margin of $25,000. The maintenance margin is $12,500. At what contract price will you get a margin call? Explain.
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