If JTM's WACC is 7.0%, should it accept the financing offer? Why yeas or No? 1 2
Fantastic news! We've Found the answer you've been seeking!
Question:
If JTM's WACC is 7.0%, should it accept the financing offer? Why yeas or No?
Transcribed Image Text:
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 A 30 31 32 B E JTM is considering purchasing a new 3-D printer costing $665,000. The manufacturer is offering a payment plan in which JTM pays 10% down and finances the rest over 24 months at $27,000/month. What is the implicit financing rate? If JTM's WACC is 7.0%, should it accept the financing offer? Cash price Down payment Monthly payment Cash price minus down payment H Price 665,000 66,500 27,000 Mo. 1 Mo. 2 Mo. 3 Mo. 4 Mo. 5 Mo. 6 Mo. 7 Mo. 8 Mo. 9 Mo. 10 Mo. 11 Mo. 12 Mo. 13 Mo. 14 Mo. 15 Mo. 16 Mo. 17 Mo. 18 Mo. 19 Mo. 20 Mo. 21 Mo. 22 Mo. 23 Mo. 24 Cash Flows 598,500 (27,000) (27,000) (27,000) (27,000) (27,000) (27,000) (27,000) (27,000) (27,000) (27,000) (27,000) (27,000) (27,000) (27,000) (27,000) (27,000) (27,000) (27,000) (27,000) (27,000) (27,000) (27,000) (27,000) (27,000) Implicit cost of credit 15.5% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 A 30 31 32 B E JTM is considering purchasing a new 3-D printer costing $665,000. The manufacturer is offering a payment plan in which JTM pays 10% down and finances the rest over 24 months at $27,000/month. What is the implicit financing rate? If JTM's WACC is 7.0%, should it accept the financing offer? Cash price Down payment Monthly payment Cash price minus down payment H Price 665,000 66,500 27,000 Mo. 1 Mo. 2 Mo. 3 Mo. 4 Mo. 5 Mo. 6 Mo. 7 Mo. 8 Mo. 9 Mo. 10 Mo. 11 Mo. 12 Mo. 13 Mo. 14 Mo. 15 Mo. 16 Mo. 17 Mo. 18 Mo. 19 Mo. 20 Mo. 21 Mo. 22 Mo. 23 Mo. 24 Cash Flows 598,500 (27,000) (27,000) (27,000) (27,000) (27,000) (27,000) (27,000) (27,000) (27,000) (27,000) (27,000) (27,000) (27,000) (27,000) (27,000) (27,000) (27,000) (27,000) (27,000) (27,000) (27,000) (27,000) (27,000) (27,000) Implicit cost of credit 15.5%
Expert Answer:
Answer rating: 100% (QA)
In the image provided JTM is considering a financing offer for a new 3D printer which costs 665000 The payment plan involves paying 10 down and then f... View the full answer
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date:
Students also viewed these finance questions
-
A manufacturer purchases a part for use at both of its plants-one at Roseville, California, the other at Akron, Ohio. The part is available in limited quantities from two suppliers. Each supplier has...
-
If the focal length of a lens is 3 centimeters and the image distance is 5 centimeters from the lens, what is the distance from the object to the lens?
-
Holbrook Memorial Diner is a charity that provides free meals to the homeless. The diner's manager has prepared the report presented below, which compares the planning budget to the actual costs for...
-
Logistical Logistics Inc. (Logistical Logistics or the "Company") provides transportation and logistics services to customers throughout a network of offices in North America, South America, and...
-
A particle moves in a two-dimensional orbit defined by (a) Find the tangential acceleration at and normal acceleration an as a function of time where the tangential and normal components are taken...
-
On August 4, 2008, a company incorrectly debits Rent Expense instead of Salaries Expense when recording payroll for the month. On August 30, the error is discovered while preparing the trial balance....
-
Refer to the bond situation of Hewitt Corporation in Exercise 15-27. Hewitt issued the bonds at the advertised price. The company uses the straight-line amortization method and reports financial...
-
a. Carlys Catering provides meals for parties and special events. In Chapter 2, you wrote an application that prompts the user for the number of guests attending an event, displays the company motto...
-
3. In 1981, JR married then 16-year-old Inka in a civil ceremony solemnized by the Mayor in their hometown. The couple lived together until 2007 when JR confessed to having an affair with Elena. Inka...
-
Selected T-accounts of Moore Company are given below for the just completed year: Required: 1. What was the cost of raw materials put into production during the year? 2. How much of the materials in...
-
1.A $1000 investment today will pay you $300 three months from now, $500 six months from now and $800 in one year.If the interest rate is 8% APR (compounded quarterly), what is the present value of...
-
Rite Shoes was involved in the transactions described below. 1. Purchased $9,400 of inventory on account. 2. Paid weekly salaries and wages, $1,040. 3. Recorded sales for the first week: Cash:...
-
1. How have you managed discussions with the client or business partner? Who did you get organisational advice from?
-
The following information concerns production in the Baking Department for August. All direct materials are placed in process at the beginning of production. ACCOUNT Work in Process-Baking Department...
-
Beginning work in process (May 1) a Started in May 2020 Completed during May 2020 Ending work in process (May 31) b Total costs added during May 2020 Physical Units Direct Conversion (Watches)...
-
What was the most noticable musical elements of the Star Spangled banner song by Mormon Tabernacle church?
-
Explain how the Court would resolve any dispute over financial matters if the couple are unable to reach an agreement, explaining the orders that can be made and the approach the Court would take,...
-
Decades after the event, Johnson & Johnson (J&J), the 130-year-old American multinational, is still praised for swiftly The company indicated that its response was based on the expectations set forth...
-
Ken (age 31) and Amy (age 28) Booth have brought you the following information regarding their income, expenses, and withholding for the year. They are unsure which of these items must be used to...
-
In 2012, Michael has net short-term capital losses of $2,000, a net long-term capital loss of $45,000, and other ordinary taxable income of $45,000. a. Calculate the amount of Michael's deduction for...
-
Ray and Maria Gomez have been married 3 years. They live at 1610 Quince Ave., McAllen, TX 78701. Ray works for Palm Oil Corporation and Maria works for the City of McAllen. Maria's Social Security...
-
The following reaction takes place in a system consisting of \(3 \mathrm{~mol} \mathrm{CH}_{4}, 5 \mathrm{~mol} \mathrm{H}_{2} \mathrm{O}\), \(1 \mathrm{~mol} \mathrm{CO}\) and \(4 \mathrm{~mol}...
-
A system is said to be in thermodynamic equilibrium if its (a) Temperature remains unchanged (b) Pressure remains unchanged (c) Chemical potential remains unchanged (d) Temperature, pressure and...
-
A system initially containing \(3 \mathrm{~mol} \mathrm{CO}_{2}, 5 \mathrm{~mol} \mathrm{H}_{2}\) and \(1 \mathrm{~mol} \mathrm{H}_{2} \mathrm{O}\) is undergoing the following reactions: \[...
Study smarter with the SolutionInn App