leasing new equipment. The lease terms include five aritual payments of $4,800 with the first at the would cost to buy and would8 be depreciated straight line to a zero salvage value over 5 years. The firm can borow at a rate of 5.5 percent and has a tax rate of 21 percent. What is the cash flow from leasing relative to purchasing in Year of40Mutiple ChoiceOOOO$21700$16.353$30.145$20.700$25.500

Lease payments:Lease payments refer to the regular monetary installments made by a lessee to a…

Answered: Rockport in considering leasing new…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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The management of River Corporation is considering the purchase of a new machine costing $380,000. The company's desired rate of return is 6%. The present value factor for an annuity of $1 at interest of 6% for 5 years is 4.212. In addition to the foregoing information, use the following data in determining the acceptability of this investment: Year 1 2 O 10.5% O 5.5% O 25.5% Operating O 15.5% Income $20,000 20,000 20,000 20,000 20,000 Net Cash Flow $95,000 95,000 The average rate of return (rounded to one decimal place) for this investment is 95,000 95,000 95,000
Harmeling Paint Ball (HPB) Corporation needs a new air compressor that costs $90,000. HPB will need it for only 3 years even though the compressor's economic life is long enough so that the lease is an operating lease. The firm can lease the compressor for 3 years with $10,000 lease payments at the end of each year. HPB's cost of debt is 10%. Answer the following questions. (Hint: See Table 19-1.) What is the Year-1 imputed interest expense? Do not round intermediate calculations. Round your answer to the nearest cent. Enter your answer as a positive value. $ What lease liability must be reported at Year 1? Do not round intermediate calculations. Round your answer to the nearest cent. Enter your answer as a positive value. $ What right-of-use asset must be reported at Year 1? Do not round intermediate calculations. Round your answer to the nearest cent. $ $
As an Engineer, you are asked to consider two building proposals, which alternative do you deem superior based on the economics? (Assume the money to be used would be borrowed and paid back within the life of the structure). The nominal interest rate is at 21.4% compounding quarterly. State which method you will use and state why. ALTERNATIVE A ALTERNATIVE B Туре Steel Cement Life 20 years 20 years Initial Cost $1089 $2954 Maintenance $486/year $138/year Cost at the end of 8 $57 $64 years
Compare the cost of the following lesing agreement with the finance charge on a loan for the same time period. The price of the car is $14,000, and its projected residual value at the end of four years is $3,000. Monthly payment $250 Capital cost reduction $1,000 Disposition charge $200 Other things being equal, one would want to finance this car rather than take this lease if the finance cost were less than Select one: a. $2,200 b. $2,000 c. $1,550 d. $1,450
The Drun's Den-Dutdoor Gear is considering a new 6-year project to produce a new tent ine. The equipment necessary would cost $1.29 million and be deprecated using saight ane depreciation to a book value of pero At the end of the project, the equipment can be sold for t5 percent of its ential cost. The company believes that it can sell 23.500 tents per year at a poce of $64 and variable costs of $25 per et The ted costs will be $395.000 per year The project will require an intal investment is net working capital of $193,000 that will be recovered at the end of the project. The required rate of retums 107 percent and the taxes 35 percent What is the NPV? O O O $40146 $14,99 SHO SOL
Answer ASAP. I need correct answer. I will rate accordingly
Compare the cost of the following leasing agreement with the finance charge on a loan for the same time period. The price of the car is $25,000, and its projected residual value at the end of five years is $10,000. Monthly payment $450 Capital cost reduction $1,700 Disposition charge $400 Other things being equal, one would want to finance this car rather than take this lease if the finance cost were less than Group of answer choices $14, 100. $15,500. $12,900. $400.
Poe Company is considering the purchase of new equipment costing $85,500. The projected annual cash inflows are $35,700, to be received at the end of each year. The machine has a useful life of 4 years and no salvage value. Poe requires a 10% return on its investments. The present value of an annuity of 1 and present value of an annuity for different periods is presented below. Compute the net present value of the machine. Periods Present Value of 1 at 10% Present Value of an Annuity of 1 at 10% 1 0.9091 0.9091 2 0.8264 1.7355 3 0.7513 2.4869 4 0.6830 3.1699 $45,409. $14,857. $27,665. $(14,857). $(27,665).
.A P2500 computer system can be leased for 79 per month for 3 years. After 3 years, it can be purchased for P750. This is also the salvage value if the system was purchased originally. What is the effective annual rate for leasing the computer?
5) Company is considering about buying an equipment. This equipment needs 100.000 $ initial investment, produces 30.000 $ revenue for 5 years and 10.000 $ salvage value at the end of year 5. a) Find the rate of return (ROR) on this investment. b) What will be the decision If MARR is 15% ?
Your client, Keith Bridgeport Leasing Company, is preparing a contract to lease a machine to Souvenirs Corporation for a period of 25 years. Bridgeport has an investment cost of $428,800 in the machine, which has a useful life of 25 years and no salvage value at the end of that time. Your client is interested in earning an 12% return on its investment and has agreed to accept 25 equal rental payments at the end of each of the next 25 years. Click here to view factor tables You are requested to provide Bridgeport with the amount of each of the 25 rental payments that will yield an 12% return on
Your client, Albert Jackson Leasing Company, is preparing a contract to lease a machine to Souvenirs Corporation for a period of 25 years. Jackson has an investment cost of $427,700 in the machine, which has a useful life of 25 years and no salvage value at the end of that time. Your client is interested in earning an 10% return on its investment and has agreed to accept 25 equal rental payments at the end of each of the next 25 years. Click here to view factor tables. You are requested to provide Jackson with the amount of each of the 25 rental payments that will yield an 10% return on investment. (Round factor values to 5 decimal places, eg. 1.25124 and final answer to 0 decimal places, e.g. 458,581) Amount of each rental payments

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