After tax cash outflows of lease and purchase. Introduction: The leasing is a financing technique which is available in the economy which allows the firm to obtain the use of certain fixed assets by making the periodic as well as contractual payments which are tax deductable.

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Answer 1

Question

Chapter 17, Problem 17.4P

a)

Summary Introduction

To determine:

After tax cash outflows of lease and purchase.

Introduction:

The leasing is a financing technique which is available in the economy which allows the firm to obtain the use of certain fixed assets by making the periodic as well as contractual payments which are tax deductable.

b)

Summary Introduction

To determine:

Present value of each cash outflow stream.

c)

Summary Introduction

To determine:

Whether the firm should lease or purchase.

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Consider the following simplified financial statements for the Yoo Corporation (assuming no income taxes): Income Statement Balance Sheet Sales Costs $ 40,000 Assets 34,160 $26,000 Debt Equity $ 7,000 19,000 Net income $ 5,840 Total $26,000 Total $26,000 The company has predicted a sales increase of 20 percent. Assume Yoo pays out half of net income in the form of a cash dividend. Costs and assets vary with sales, but debt and equity do not. Prepare the pro forma statements. (Input all amounts as positive values. Do not round intermediate calculations and round your answers to the nearest whole dollar amount.) Pro forma income statement Sales Costs $ 48000 40992 Assets $ 31200 Pro forma balance sheet Debt 7000 Equity 19000 Net income $ 7008 Total $ 31200 Total 30304 What is the external financing needed? (Do not round intermediate calculations. Negative amount should be indicated by a minus sign.) External financing needed $ 896

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Answer 2

Question

Chapter 17, Problem 17.4P

a)

Summary Introduction

To determine:

After tax cash outflows of lease and purchase.

Introduction:

The leasing is a financing technique which is available in the economy which allows the firm to obtain the use of certain fixed assets by making the periodic as well as contractual payments which are tax deductable.

b)

Summary Introduction

To determine:

Present value of each cash outflow stream.

c)

Summary Introduction

To determine:

Whether the firm should lease or purchase.

Expert Solution & Answer

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Answer 3

Question

Chapter 17, Problem 17.4P

a)

Summary Introduction

To determine:

After tax cash outflows of lease and purchase.

Introduction:

The leasing is a financing technique which is available in the economy which allows the firm to obtain the use of certain fixed assets by making the periodic as well as contractual payments which are tax deductable.

b)

Summary Introduction

To determine:

Present value of each cash outflow stream.

c)

Summary Introduction

To determine:

Whether the firm should lease or purchase.

Expert Solution & Answer

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Check out a sample textbook solution

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Answer 4

Question

Chapter 17, Problem 17.4P

a)

Summary Introduction

To determine:

After tax cash outflows of lease and purchase.

Introduction:

The leasing is a financing technique which is available in the economy which allows the firm to obtain the use of certain fixed assets by making the periodic as well as contractual payments which are tax deductable.

b)

Summary Introduction

To determine:

Present value of each cash outflow stream.

c)

Summary Introduction

To determine:

Whether the firm should lease or purchase.

Expert Solution & Answer

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Answer 5

Chapter 17, Problem 17.4P

a)

Summary Introduction

To determine:

After tax cash outflows of lease and purchase.

Introduction:

The leasing is a financing technique which is available in the economy which allows the firm to obtain the use of certain fixed assets by making the periodic as well as contractual payments which are tax deductable.

b)

Summary Introduction

To determine:

Present value of each cash outflow stream.

c)

Summary Introduction

To determine:

Whether the firm should lease or purchase.

Answer 6

Chapter 17, Problem 17.4P

a)

Summary Introduction

To determine:

After tax cash outflows of lease and purchase.

Introduction:

The leasing is a financing technique which is available in the economy which allows the firm to obtain the use of certain fixed assets by making the periodic as well as contractual payments which are tax deductable.

Answer 7

Chapter 17, Problem 17.4P

a)

Summary Introduction

To determine:

After tax cash outflows of lease and purchase.

Introduction:

The leasing is a financing technique which is available in the economy which allows the firm to obtain the use of certain fixed assets by making the periodic as well as contractual payments which are tax deductable.

Answer 8

b)

Summary Introduction

To determine:

Present value of each cash outflow stream.

Answer 9

b)

Summary Introduction

To determine:

Present value of each cash outflow stream.

Answer 10

c)

Summary Introduction

To determine:

Whether the firm should lease or purchase.

Answer 11

c)

Summary Introduction

To determine:

Whether the firm should lease or purchase.

Answer 12

Expert Solution & Answer

Answer 13

Expert Solution & Answer

Answer 14

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Answer 15

Ch. 17.1 - Prob. 17.1RQ Ch. 17.2 - Prob. 1FOE Ch. 17.2 - What is leasing? Define, compare, and contrast...Ch. 17.2 - Describe the four basic steps involved in the...Ch. 17.2 - What type of lease must be treated as a...Ch. 17.2 - Prob. 17.5RQ Ch. 17.3 - What is the conversion feature? What is a...Ch. 17.3 - When the market price of the stock rises above the...Ch. 17.3 - Define the straight bond value, conversion (or...Ch. 17.4 - What are stock purchase warrants? What are the...

After tax cash outflows of lease and purchase. Introduction: The leasing is a financing technique which is available in the economy which allows the firm to obtain the use of certain fixed assets by making the periodic as well as contractual payments which are tax deductable.

Solution Summary: The author explains the after tax cash outflows of lease and purchase by calculating the depreciation cost, interest amount, total deductions, and tax shields.

Concept explainers

Videos

To determine:

After tax cash outflows of lease and purchase.

Introduction:

The leasing is a financing technique which is available in the economy which allows the firm to obtain the use of certain fixed assets by making the periodic as well as contractual payments which are tax deductable.

To determine:

Present value of each cash outflow stream.

To determine:

Whether the firm should lease or purchase.

Want to see the full answer?

Chapter 17 Solutions

After tax cash outflows of lease and purchase. Introduction: The leasing is a financing technique which is available in the economy which allows the firm to obtain the use of certain fixed assets by making the periodic as well as contractual payments which are tax deductable.

Solution Summary: The author explains the after tax cash outflows of lease and purchase by calculating the depreciation cost, interest amount, total deductions, and tax shields.

Concept explainers

Videos

To determine: After tax cash outflows of lease and purchase. Introduction: The leasing is a financing technique which is available in the economy which allows the firm to obtain the use of certain fixed assets by making the periodic as well as contractual payments which are tax deductable.

To determine: Present value of each cash outflow stream.

To determine: Whether the firm should lease or purchase.

Want to see the full answer?

Chapter 17 Solutions

To determine:

After tax cash outflows of lease and purchase.

Introduction:

The leasing is a financing technique which is available in the economy which allows the firm to obtain the use of certain fixed assets by making the periodic as well as contractual payments which are tax deductable.

To determine:

Present value of each cash outflow stream.

To determine:

Whether the firm should lease or purchase.