Your company decided to offer product delivery service and would need a truck for the delivery. You are evaluating the following two options. Option 1: Your company can lease a truck at a pretax cost of $27,000 per year. Option 2: Your company can buy a truck at a cost of $84,000, with annual pretax maintenance expenses of $14,000. The truck will depreciate to zero on a straight-line basis. The truck has a 4 years life and will have a salvage value of $18,000 at the end of its life. If the tax rate is 35% and the discount rate is 10%, which option would you prefer? (Hint: compute the equivalent annual cost (EAC).)

A firm is considering leasing or buying a mower. The mower costs $1000 and can be depreciated and falls into the MACRS 3 year class (33%; 45%; 15% and 7%). A maintenance contract will be purchased for $200 per year payable at the start of each year for 4 years. The firms tax rate is 30%. The firm expects to sell the mower for $96 at the end of the 3rd year. What is the net sale price when the mower is sold?

Some equipment is needed for a construction project. It can be leased for $150,000 annually, or it can be purchased for $900,000 at the beginning and sold for $225,000 at the end of 3 years. What is the rate of return for owning the equipment rather than leasing it?

Some equipment is needed for a 4-year project. It can be leased for $15,000 annually, or it can be purchased for $60,000 at the beginning and sold for $35,000 at the end. What is the rate of return for owning the equipment rather than leasing it?

Reynolds Construction (RC) needs a piece of equipment that costs $100,000. The equipment has an economic life of 2 years and no residual value. The equipment will not require maintenance because its useful life is so short. RC can borrow the full cost of the equipment at an interest rate of 10% with payments due at the end of the year. Alternatively, RC can lease the equipment for $55,000 with payments due at the end of the year. Assume RC chooses the lease, which is a finance lease for financial reporting purposes. Answer the following questions. (Hint: See Table 19-1.) What is the initial lease liability that must be reported on the balance sheet? Do not round intermediate calculations. Round your answer to the nearest cent. Enter your answer as a positive value. What is the initial right-of-use asset? Do not round intermediate calculations. Round your answer to the nearest cent. What will RC report as an interest expense at Year 1? Round your answer to the nearest cent. Enter your…

A company is considering several mutually exclusive ways that can meet a requirement for a filling machine for its creamer line. One choice is to buy a machine. This would cost $75 000 and last for six years with a salvage value of $12 000. Alternatively, it could contract with a packaging supplier to get a machine free. In this case, the extra costs for packaging supplies would amount to $17 500 per year over the six-year life (after which the supplier gets the machine back with no salvage value for the company). The third alternative is to buy a used machine for $40 000 with zero salvage value after six years. The used machine has extra maintenance costs of $3500 in the first year, increasing by $2500 per year. In all cases, there are installation costs of $8000 and revenues of $25 000 per year. a) Using the IRR method, determine which is the best alternative. The MARR is 10 percent.

Can you help me with this problem with step by step explanation, please?

Which is a manufacturer of material handling equipment and machinery, is taking two alternatives into their consideration with regards to an equipment which it needs. Equipment A can be purchased with the cost of P850,000 and have a salvage value of P150,000 at the end of 10 years. It has a daily operating cost of P550. For the other option, the company can just rent the equipment for P1550 per day. At 18% interest, how many days should the equipment be is use if the Equipment A would be chosen to break even?

Reynolds Construction (RC) needs a piece of equipment that costs $150,000. The equipment has an economic life of 3 years and no residual value. The equipment will not require maintenance because its useful life is so short. RC can borrow the full cost of the equipment at an interest rate of 7% with payments due at the end of the year. Alternatively, RC can lease the equipment for $55,000 with payments due at the end of the year. Assume RC chooses the lease, which is a finance lease for financial reporting purposes. Answer the following questions. (Hint: See Table 19-1.) What is the initial lease liability that must be reported on the balance sheet? Do not round intermediate calculations. Round your answer to the nearest cent. Enter your answer as a positive value. $   What is the initial right-of-use asset? Do not round intermediate calculations. Round your answer to the nearest cent. $   What will RC report as an interest expense at Year 1? Round your answer to the nearest cent.…

Reynolds Construction (RC) needs a piece of equipment that costs $150,000. The equipment has an economic life of 3 years and no residual value. The equipment will not require maintenance because its useful life is so short. RC can borrow the full cost of the equipment at an interest rate of 7% with payments due at the end of the year. Alternatively, RC can lease the equipment for $55,000 with payments due at the end of the year. Assume RC chooses the lease, which is a finance lease for financial reporting purposes. Answer the following questions. (Hint: See Table 19-1.) What will RC report as an amortization expense at Year 1? Do not round intermediate calculations. Round your answer to the nearest cent. Enter your answer as a positive value. $   What will RC report as the lease liability at Year 1? Do not round intermediate calculations. Round your answer to the nearest cent. Enter your answer as a positive value. $   What will RC report as the right-of-use asset at Year 1? Do…