YearI2345 6 ∞78910||121314151617181920213 Years.3333.4445.1481.0741Recovery Period Class7 Years5 Years.2000.3200.1920.1152.1152.0576.1429.2449.1749. 1249.0893.0892.0893.044610 Years.1000.1800.1440.1152.0922.0737.0655.0655.0656.0655.032815 Years.0500.0950.0855.0770.0693.0623.0590.0590.0591.0590.0591.0590.0591.0590.0591.029520 Years.03750.07219.06677.06177.05713.05285.04888.04522.04462.04461.04462.04461.04462.04461.04462.04461.04462.04461.04462.04461.02231 You work for a nuclear research laboratory that is contemplating leasing a diagnosticscanner (leasing is a common practice with expensive, high-tech equipment). Thescanner costs $7,600,000, Because of radiation contamination, it will actually becompletely valueless in four years. You can lease it for $2,145,000 per year for fouryears. Assume that the tax rate is 23 percent. You can borrow at 6 percent before taxes.Assume that the scanner will be depreciated as three-year property under the MACRSdepreciation.What is the NAL of the lease? (A negative answer should be indicated by a minus sign.Do not round intermediate calculations and round your answer to 2 decimal places,e.g., 32.16.)Answer is complete but not entirely correct.$ 1,737,350.00 XNAL

NPV is also known as Net Present Value.. It is a capital budgeting technique which helps in decision…

Answered: You work for a nuclear research…

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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(Ignore income taxes in this problem.) The management of an amusement park is considering purchasing a new ride for P40,000 that would have a useful life of 15 years and a salvage value of P6,000. The ride would require annual operating costs of P22,000 throughout its useful life. The company's discount rate is 12%. Management is unsure about how much additional ticket revenue the new ride would generate-particularly since customers pay a flat fee when they enter the park that entitles them to unlimited rides. Hopefully, the presence of the ride would attract new customers. The additional revenue the ride have to generate per year to make it an attractive investment would amount to O P 27,712 O P27,872 none of these O P 12,583
(Ignore income taxes in this problem.) Your Company has some equipment that can either be repaired right now for $40,000 or sold for $13,000 scrap value. As an alternative, Your Company could buy new equipment for $145,000. Both pieces of equipment would last 8 years. The annual operating expenses of the new equipment would be $6,500 less than the operating costs of the old machine. In addition, the new machine would be able to produce 100 more units that can be sold for a contribution margin of $80 per unit. The new equipment is expected to have a $14,000 salvage value in 8 years. Your Company discount rate is 7%. What is the net present value of the decision to buy the new equipment instead of repairing the old equipment? O $400 O $3,146 O $2.728 O ($5,421)
You work for a nuclear research laboratory that is contemplating leasing a diagnostic scanner (leasing is very common practice with expensive, high-tech equipment). The scanner costs $1,000,000 and it would be depreciated straight-line to zero over four years. Because of radiation contamination, it will actually be completely valueless in four years. You can lease it for $300,000 per year for four years. Assume a 35 per cent tax bracket. You can borrow at 8 per cent before taxes. Should you lease or buy? What would the lease payment have to be for both lessor & lessee to be indifferent about the lease? Rework problem 1 assuming that the scanner will be depreciated as 3-year property under MACRS.
Cori's Dog House is considering the installation of a new computerized pressure cooker for hot dogs. The cooker will increase sales by $8,800 per year and will cut annual operating costs by $14,900. The system will cost $51,000 to purchase and install. This system is expected to have a 7-year life and will be depreciated to zero using straight-line depreciation and have no salvage value. The tax rate is 35 percent and the required return is 12.4 percent. What is the NPV of purchasing the pressure cooker?
Please correct answer and don't use hend raiting
31)can you please help with this question?
(Ignore income taxes in this problem.) Your Company has some equipment that can either be repaired right now for $50,000 or sold for $13,000 scrap value. As an alternative, Your Company could buy new equipment for $150,000. Both pieces of equipment would last 8 years. The annual operating expenses of the new equipment would be $8,500 less than the operating costs of the old machine. In addition, the new machine would be able to produce 100 more units that can be sold for a contribution margin of $65 per unit. The new equipment is expected to have a $10,000 salvage value in 8 years. Your Company discount rate is 8%. What is the net present value of the decision to buy the new equipment instead of repairing the old equipment? a $4,605 b $3,225 c $1,605 d ($ 795)
You work for a nuclear research laboratory that is contemplating leasing a diagnostic scanner (leasing is a common practice with expensive, high-tech equipment). The scanner costs $6,900,000, Because of radiation contamination, it will actually be completely valueless in four years. You can lease it for $2,030,000 per year for four years. Assume that the tax rate is 21 percent. You can borrow at 8 percent before taxes. Assume that the scanner will be depreciated as three-year property under the MACRS depreciation. What is the NAL of the lease? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) NAL $ -137,396.80
You are the CFO for a major hospital and must decide whether you want to Lease or Buy a new diagnostic scanner. If the cost is $5MM and you can depreciate it (straight line) over 4 years with a zero residual value. If the annual Lease Payments are $1.4MM/year, what are your future annual cash flows ( assuming a 21% tax rate) for the hospital? Make sure you do not add any dollar signs or commas to your answer. Just put in the whole number of dollars
) You work for a nuclear research laboratory that is contemplating leasing a diagnostic scanner(leasing is a very common practice with expensive, high-tech equipment). The scanner costs¢2.5 million and it would be depreciated straight-line to zero over 4 years. Because ofradiation contamination, it will actually be completely valueless in 4 years. You can lease itfor ¢550,000 per year for 4 years. Assume the tax rate is 24 percent. You can borrow at 10percent before taxes. What is the net advantage to leasing from the lessor's viewpoint?
The smiths are not sure whether they should buy or lease equipment. A five year lease could be arranged with annual lease payment of 5000$ payable at beginning of each year. The tax shield from lease payment is available at year end. The company tax rate is 25%. The equipment would cost $25000 and has a five year expected lifespan, and no residual value is expected. if purchased, asset would be financed through a term loan at 12%. The loan calls for equally payment to be made at end of end year for five years. Suppose that the equipment would qualify for CCA on a straight-line basis over five years. Required: 1. Calculate the cash flows for each financing alternate. 2. Which alternative is the most economical.
The owner of a pizza restaurant needs to buy a new pizza oven for the restaurant. The oven costs $450, is expected to last 5 years, and will be depreciated using the straight line method. If the total cash inflows from the new oven are constant at $750 for the next 5 years, and the total cash outflows are constant at $380 for the next 5 years, determine the cash flow for the pizza restaurant in the second year assuming the tax rate is 34%. $ Place your answer in dollars and cents.

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