Buildtrock Builders need a crane costing Rs.10 lakhs subject to depreciation on straight line method and has a life of 5 years. The lease rent is Rs.2.2 lakhs per annum to be paid in advance each year for 5 years. If the company can raise debt at 14% per annum payable at the beginning of the year should the company buy or lease the crane.
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- A construction company can purchase a used backhoe for $90,000 and spend $450 per day in operating costs. The equipment will have a 5 -year life then sell it at salvage for $3,000. Alternatively, the company can lease the equipment for $800 per day. How many days per year must the company use the equipment in order to justify its purchase at an interest rate of 6% per year.The Company owns a machine with a value of $50,000 and a 5-year useful life. The estimated salvage value in five years is $10,000. The number of payments will be five (5) and the first payment is due immediately. The remaining payments are due at the end of each of the next four years. Assume your client desires a 10% rate of return. What amount of payment should be specified in the lease contract? Consider the salvage value. When you consider the salvage value, in Excel, the future value is a negative number, and the present value is positive. State your answer without commas or dollar signs, and no decimals.Company C is considering a leasing arrangement for an asset that has no value after its use for 3 years. It can borrow the value of the asset, at a 3-year simple interest loan of 10% with payments at the end of the year and buy the asset, or the company can make 3 equal end-of-year lease payments of $2,100,000 each and lease them. Annual maintenance costs associated with ownership are estimated at $240,000, but this cost would be borne by the lessor if it leases. What is the net advantage to leasing (NAL), if the firm's tax rate is 25%? (round to the nearest integer)(The Depreciation rate is 33.33% for Year 1, 33.33% for Year 2, and 33.33% for Year 3. The value of the asset $4,800,000)
- Super Sonics Entertainment is considering buying a machine that costs $445,000. The machine will be depreciated over five years by the straight-line method and will be worthless at that time. The company can lease the machine with year-end payments of $121,000. The company can issue bonds at a 10 percent interest rate. If the corporate tax rate is 35 percent. Assume that lease payments occur at the end of the year Calculate the NALA construction company can purchase a used backhoe for $90,000 and spend $450 per day in operating costs. The equipment will have a 5-year life with no salvage value. Alternatively, the company can lease the equipment for $800 per day. How many days per year must the company use the equipment in order to justify its purchase at an interest rate of 8% per yearMauer Mining Company leases a special drilling press with annual payments of $100,000. The contract calls for rent payments at the beginning of each year for a minimum of 6 years. Mauer Mining can buy a similar drill for $490,000, but it will need to borrow the funds at 10%. a. Determine the present value of the lease payments at 10%. b. Should Mauer Mining lease or buy this drill?
- Brambles Inc is looking to acquire a new equipment for its project that will last for eight years. The after-tax required rate of return of the project is 16% per annum. Brambles can borrow at a before-tax interest rate of 8.5% per annum and buy the equipment outright or lease the equipment from ABC's Leasing. Brambles has evaluated the lease and decided to buy the equipment by borrowing since the NPV of lease is calculated to be -$12,000. However, the purchase cost of the equipment was under- estimated by $24,000, also the salvage value of the equipment at the end of the lease term was under- estimated by $8,000. The applicable corporate tax rate is 30% and the equipment is going to be fully depreciated over the eight years using a straight-line method. Will Brambles' decision be affected by adjusting the purchasing cost and salvage value? O It is now indifferent between lease and borrow-to-buy. The equipment should still be purchased by borrowing. None of the other answers is…An investor is considering buying a property for shillings 500,000. The cost of land is 20% of the purchase price. The building will however be depreciated over 40 years on a straight-line basis. The investor will take a loan of 50% of the purchase price at 10% per annum payable monthly for 20 years . The net operating income for the next 2 years is sh 40000 and sh 50000 . The property can be sold for 600,000 at the end of year 2. The tax on current income is 30% of the capital gain tax is 15% of price appreciation and 30% on price depreciation recapture.Required:Calculate the after tax equity IRR. IS THE PROJECT VIABLE ASSUMING THE INVESTOR HAS A REQUIRED RATE OF RETURN OF 15%.A manufacturer can lease a machine for 7 years at $3,000 per quarter, payable at the beginning of each quarter. Alternatively, they can purchase the machine for $78,000 and sell it for $8,700 in 7 years. The cost of capital is 6.2% compounded annually. a. What is the present value of the cost: (enter a positive value accurate to the nearest dollar) i) of the lease option? $ ii) of the purchase option? $ b. Should the manufacturer purchase or lease? O Purchase since Purchase PV is higher than Lease PV O Lease since Lease PV is higher than Purchase PV O Lease since Purchase PV is lower than Lease PV O Purchase since Lease PV is lower than Purchase PV Lease since Lease PV is lower than Purchase PV Purchase since Lease PV is higher than Purchase PV Submit Question
- Bird Wing Bedding can lease an asset for 4 years with payments of $16,000 due at the beginning of the year. The firm can borrow at a 6% rate and pays a 25% federal-plus-state tax rate. The lease qualifies as a tax-oriented lease. What is the cost of leasing?A contract has been signed to lease a building at Php 20,000 per year with an annual increase of Php1,500 for 8 years. Payment are to be made at the end of each year starting one year from now. The prevailing interest rate is 7%. What lump sum paid today would be equivalent to the 8-year lease-payment plan? a.Php147,609.377 b.Php150,609.377 c.Php160,609.377 d.Php149,609.377Kaleidescope Entertainment is considering buying a machine that costs $554,000. The machine will be depreciated over five years by the straight-line method and will be worthless at that time. The company can lease the machine with year-end payments of $129,000. The company can issue bonds at an interest rate of 8 percent. The corporate tax rate is 24 percent. What is the NAL of the lease?