Truck Ltd wants to buy a new truck. The cost of the truck is $80 000. The

Fantastic news! We've Found the answer you've been seeking!

Question:

Truck Ltd wants to buy a new truck. The cost of the truck is $80 000. The truck has a useful life of 8 years and is depreciated at $10 000 per year. The truck is expected to have a zero salvage value at the end of its useful life. The corporate tax rate is 20%. Truck Ltd is evaluating the two options below:

1. Truck Ltd can get a bank loan at 8% interest per annum after tax.

2. Truck Ltd is also offered a lease finance option with Toyota, with 4 annual payments of $30 000 to start 4 years from the day the lease is signed.

Required:

Advice Truck Ltd the best option to finance the truck. Show all calculations.

Posted Date: Nov 29, 2021 05:53 PM

See More Questions

A hospital wants to buy a new MRI machine for $400,000. The annual revenue from the machine is estimated at $110,000 per year while maintenance costs per year are calculated to be $20,000. The...
Warden Co plans to buy a new machine. The cost of the machine, payable immediately, is $800,000 and the machine has an expected life of five years. Additional investment in working capital of $90,000...
To buy a new house you must borrow $ 150,000. To do this you take out a $ 150,000, 30- year, 10 percent mortgage. Your mortgage payments, which are made at the end of each year (one payment each...
Required Use the Target Corporations annual report in Appendix B to answer the following questions. a. What was Targets current ratio for its fiscal-year ended February 1, 2014 (2013) and 2012? b....
In the following regression, X = total assets ($ billions), Y = total revenue ($ billions), and n = 64 large banks. (a) Write the fitted regression equation. (b) State the degrees of freedom for a...
Widmer Company had gross wages of $240,000 during the week ended June 17. The amount of wages subject to social security tax was $240,000, while the amount of wages subject to federal and state...
Consider a strategy of the form $(\gamma, 0,0)$ for the investment wheel. Show that the overall factor multiplying your money after $n$ steps is likely to be \((1+2 \gamma)^{n / 2}(1-\gamma)^{n /...
On January 1, 2006, Mason Co. entered into a 12-year lease on a building. The lease contract requires (1) annual (prepaid) rental payments of $ 36,000 each January 1 throughout the life of the lease...
At the end of the accounting period, Harris Company had $6,000 of par value common stock issued, additional paid in capital of $5,500, retained earnings of $6,000, and $2,000 of treasury stock. What...
Practice reading a graph. These questions all refer to Figure 1.1. (a) What fraction of days have a daily high temperature of 28C during the 1970s and the 2010s? (b) For the 1970s and 2010s, what is...
A 40 years old woman is preparing for her retirement at the age of 65. She estimates that she can live on $10,000 per year in terms of present-day dollars (constant, zero date, deflated, todays). It...
Describe, and explain each stage of, the cycle of profit planning and control .
In Problems 20-52: a. State the type; and $\mathbf{b}$. Answer the question. What is the future value of $\$ 9,000$ invested for 4 years at $20 \%$ compounded monthly?
Melissa agrees to contribute $\$ 500$ to the alumni fund at the end of each year for the next 5 years. Shannon wants to match Melissa's gift, but she wants to make a lump-sum contribution. If the...
Find the present value of the ordinary annuities in Problems 21-32. Amount of Deposit m 21. $500 Frequency n annually Rate r 8% Time t 30 yr
Explain, giving a suitable example in each case, what is meant by the management functions of: (a) planning ; (b) decision making ; and (c) control .
QUESTION ONE Emali Co. Ltd. has undergone a period of substantial growth following its establishment five years ago. At the last annual general meeting Smith & Co. Associates, a tow-partner firm of...
When a company has a contract involving multiple performance obligations, how must the company recognize revenue?
Calculate the magnitude of the magnetic field at the center of a circular arc of radius $25 \mathrm{~mm}$ spanning an angle of $\pi / 2$ and carrying a current of $3.0 \mathrm{~A}$.
You are calibrating magnetic coils for a particle detector. One step involves checking the magnetic field at different positions inside a toroid, and you are asked to measure the field at the...
Wire $1,5.0 \mathrm{~m}$ long and carrying a current of $3.0 \mathrm{~A}$, experiences a magnetic force of magnitude $4.0 \times 10^{-7} \mathrm{~N}$ when placed $90 \mathrm{~mm}$ away from...

Truck Ltd wants to buy a new truck. The cost of the truck is $80 000. The

Question:

Expert Answer:

Truck Ltd Have an option to Purchase the Truck at 80000 Truck Has Annual depreciation 10000given Tru... View the full answer

Students also viewed these finance questions