Calculate the cash flows for each alternative, Cost Accounting

Assignment Help:

A company is evaluating the following lease or buy option.

A four year lease with annual payments of $25,000 payable at the beginning of the year.The tax shield is available at the end of the year.  The company's tax rate is 25% and company's cost of capital is 12%.  


The machine costs $85,000 has a four year useful life with no residual value.If financed the asset would be financed through a term loan at 10%.  The loan calls for equal payments to be made at the end of each year for four years.The machine would qualify for accelerated capital cost allowance written off on a straight line basis over two years.

Calculate the cash flows for each alternative.  Which alternative is the most attractive?


Related Discussions:- Calculate the cash flows for each alternative

Long run average marginal cost curves of the firm, Q. Let a firm's producti...

Q. Let a firm's production function be given by K 0.3 L 0.7 . (i) Sketch (without specific numbers) the shape of the long run average and long-run marginal cost curves of the fir

Relationship among financial accounting and cost accounting, Relationship a...

Relationship among Financial Accounting and Cost Accounting The difference among management and cost accounting may be highlighted by using a number of questions namely as;

Gross rental revenue, Operating Income 1. Operating Income is derived f...

Operating Income 1. Operating Income is derived from two sources, Rental Income from businesses operating in the warehouse complex and Interest Income of the project operating

Calculate the cash value financing interest rate , Calculate the today's ca...

Calculate the today's cash value of a car that can be leased with $5000 down, bi-weekly payments of $199 over 4 years and a buy-back value of $15,000 at the end of the lease if the

Assume a base cost for a conference room, A local hotel offers lodging serv...

A local hotel offers lodging services.  You can pick a name for the hotel(Home Sweet Home Hotel). Your team will develop a prototype reservation system to record client bookings fo

Compute the most profitable combination of products, GZ Inc. manufactures t...

GZ Inc. manufactures two products that require both machine processing and labor operations. Although there is unlimited demand for both products, GZ could devote all its capacitie

what are the flexible budget formula, Question: Timothy Ltd uses a fle...

Question: Timothy Ltd uses a flexible budget for overhead costs. The company expects to produce 40,000 units of the product it manufactures. Each unit requires 0.40 direct labo

Compute the industry volume variance for each product, The next year's budg...

The next year's budget for Benny, Inc., is given below: Product 1-2 Sales $945,000-688500 Variable costs 459,900-297,000 Fixed costs 300,000-3

Briefly decribe the benefits of a cash budget, You are provided with the su...

You are provided with the subsequent information relating to Cello Ltd. The accountant is currently preparing the budget for the next three months ending 30 June 2010.

Write Your Message!

Captcha
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