Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
1. Lease vs. Buy
Trasky Company is trying to decide whether it should purchase or lease a new automated machine to be used in the production of a new product. If purchased, the new machine would cost $100,000 and would be used for ten years. The salvage value at the end of ten years is estimated at $20,000. The machine would be depreciated using straight line depreciation over a seven year period. The annual maintenance and operating costs would be $20,000. Annual revenues are estimated at $55,000.
If the machine is leased, the company would need to pay annual lease payments of $20,700. The first lease payment and a deposit of $5,000 are due immediately. The last lease payment is paid at the beginning of Year 10. The deposit is refundable at the end of the tenth year. In additional, under a normal contract, the company must pay for all maintenance and operating costs, although the leasing company does offer a service contract that will provide annual maintenance (on leased machines only). The contract must be paid up front and costs $30,000. Trasky estimates that the contract will reduce its annual maintenance and operating costs by $10,000. Trasky's cost of capital is 14%. The tax rate is 40%. The service contract's costs would e expensed over the 10 year period. Assume this is an operating lease.
a. Calculate the NPV for the purchase, lease without the service contract, and the lease with the service contract.b. Which is the best alternative?
On December 31, 2010, the stockholders' equity section of Arndt, Inc., was as follows: Common stock, par value $10; authorized 30,000 shares; issued and outstanding 9,000 shares $
The risk-free rate of return, rRF , is 10%; the needed rate of return on the market, rM, 16%; and Schuler Company's stock has a beta coefficient of 1.6. a. If the dividend
Verizon Corporation has 55% equity and 45% debt (market values) in its capital structure. The pretax cost of debt is 7%, and that of equity 12%. The total value of the company is $
what if 50% of customers who switch from pisa pizza who switch from original pizza to healthier pizza then switch to another brand from healthier pizza.
MarmadukeMuffett once had a girlfriend who ran an antiques business in London'sKings Road. Ever since then, he has been hooked on the furniture trade and now runsMarmaduke'sMarvell
Q. Explain about Financial Accounting Standards? Financial Accounting Standards - Official promulgations, also called STATEMENTS OF FINANCIAL ACCOUNTING STANDARDS, by FINANCIAL
1. According to the notes to the financial statements, what method or methods does the company use to depreciate "plant and equipment?" What rate does it use to depreciate plant an
BREACH OF TRUST Remedies available to beneficiary: Injunction, Personal action, Criminal liability. Defence of trusts: He may be relieved from liability if, in the opini
OTHER ASPECTS OF THE CONSOLIDATED BALANCE SHEET The consolidated balance sheet may require a special approach under the following situations: 1) Pre-acquisition losses in subs
Presented below are condensed financial statements adapted from those of two actual companies competing as the primary players in a specialty area of the food manufacturing and dis
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!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd