A firm is considering the purchase of a new equipment costing $4,941,100 which qualifies for a...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
A firm is considering the purchase of a new equipment costing $4,941,100 which qualifies for a 27% CCA rate. This equipment has a 4-year life after which it will be worthless. The firm can lease it for $1,501,930 per year for its useful life. Assume that the firm makes payments at the end of the year, the asset pool remains open, the tax rate is 29%, and the pre-tax cost of borrowing is 7.54%. What would the lease payment have to be for both the lessor and lessee to be indifferent to the lease? O $1,436,422 O $1,474,222 O $1,512,023 O $1,549,823 O $1,587,624 Previous Page Next Page A firm is considering the purchase of a new equipment costing $4,941,100 which qualifies for a 27% CCA rate. This equipment has a 4-year life after which it will be worthless. The firm can lease it for $1,501,930 per year for its useful life. Assume that the firm makes payments at the end of the year, the asset pool remains open, the tax rate is 29%, and the pre-tax cost of borrowing is 7.54%. What would the lease payment have to be for both the lessor and lessee to be indifferent to the lease? O $1,436,422 O $1,474,222 O $1,512,023 O $1,549,823 O $1,587,624 Previous Page Next Page
Expert Answer:
Answer rating: 100% (QA)
Answers lease payment Page 1 Equipment cost 4941100 depre... View the full answer
Related Book For
Engineering Economy
ISBN: 978-0132554909
15th edition
Authors: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Posted Date:
Students also viewed these finance questions
-
A firm is considering the purchase of a new equipment costing $5,052,025 which qualifies for a 26% CCA rate. This equipment has a 4-year life after which it can be sold for $721,980. The firm can...
-
A firm is considering the purchase of a new equipment costing $7,074,880 which qualifies for a 39% CCA rate. This equipment has a 4-year life after which it can be sold for $1,435,170. The firm can...
-
A firm is considering the purchase of a new machine to increase the productivity of existing production process. All the alternatives have a life of 10 years and they have negligible market value...
-
Jeffrey Glockzin was an employee of Nordyne, Inc. (Nordyne), which manufactured air conditioning units. Sometimes Glockzin worked as an assembly line tester. The job consisted of using bare metal...
-
a) Are e-mail messages sent by employees private? b) What should employees be trained not to put in e-mail messages?
-
A hollow aluminum tube used in a roof structure has an outside diameter d2 = 104 mm and an inside diameter d1 = 82 mm (see figure). The tube is 2.75 m long, and the aluminum has shear modulus G = 28...
-
Do Audience Ratings Differ Based on the Genre of the Movie? The dataset HollywoodMovies includes a quantitative variable on the AudienceScore of the movie as well as a categorical variable Variable...
-
Dunlop Company makes a product that it sells for $200. Dunlop incurs annual fixed costs of $250,000 and variable costs of $160 per unit. Required The following requirements are interdependent. For...
-
Gordon Growth Company is expected to pay a dividend of $3.4 next period and dividends are expected to grow at 3% per year. The required return is 11%. What is the current price? What is the value of...
-
Using information about the following company, calculate the share premium / (discount) a private equity house will be willing to pay for the Company. Assume pre deal net debt is refinanced. Assume...
-
For a sample of 12 college football players, the Mean heart rate after a morning workout session was 86 beats per minute, and the standard deviation of the sample was 8. Find the 90% confidence...
-
A 69-g ice cube at 0C is placed in 981 g of water at 30C. What is the final temperature of the mixture? C Additional Materials eBook
-
An electron, which is originally at rest, is accelerated by a constant electric field of 220 N/C between two oppositely charged plates. If the plates are 0.42 mm apart, what speed will the electron...
-
design and code several class templates and test them on different instantiations. Learning Outcomes Upon successful completion of this workshop, you will have demonstrated the abilities to: design...
-
A rocket engine can accelerate a rocket launched from rest vertically up with an acceleration of 23.4 m/s. However, after 50.0 s of flight the engine fails. Ignore air resistance. What is the...
-
Write a Java Servlet Program that represents a pseudo ATM machine where the user will authenticate their userID from the client-side and after successful authentication make a deposit, withdraw funds...
-
The cannon on a battleship can fire a shell a maximum distance of43.9km. (a)Calculate the initial velocity of the shell in meters per second. (Enter the magnitude.) m/s (b)What maximum height in...
-
MgO prevents premature evaporation of Al in a furnace by maintaining the aluminum as Al2O3. Another type of matrix modifier prevents loss of signal from the atom X that readily forms the molecular...
-
Many persons prepare for retirement by making monthly contributions to a savings program. Suppose that $2,000 is set aside each year and invested in a savings account that pays 10% interest per year,...
-
Two alternative designs are under consideration for a tapered fastening pin. The fastening pins are sold for $0.70 each. Either design will serve equally well and will involve the same material and...
-
Buildings that are constructed to be environmentally responsible are referred to as "green buildings." They cut down on energy use, increase water efficiency, improve indoor air quality and use...
-
A political pollster approaches people on the street and asks them to describe their political affiliation. Twenty-eight people describe themselves as Democrats, 25 as Republicans, 8 people provide a...
-
Listed below are a number of hypothetical research hypotheses. For each hypothesis, identify the independent and dependent variable. a. Male drivers are more likely to exhibit road rage behaviors...
-
Listed below are a number of research questions and hypotheses from actual published articles. For each hypothesis, identify the independent and dependent variable. a. The use of color in a Yellow...
Study smarter with the SolutionInn App