First Northern Minerals must install $3.9 million of new machinery in its Ontario mine. It can obtain
Question:
(1) The machinery falls into asset Class 38 with a declining balance CCA rate of 30%.
(2) Under either the lease or the purchase, First Northern must pay for insurance, property taxes, and maintenance.
(3) The firm's tax rate is 30%.
(4) The loan would have an interest rate of 11%.]
(5) The lease terms call for $870,000 payments at the beginning of each of the next
4 years.
(6) Assume that First Northern Minerals has no use for the machine beyond the expiration of the lease. The machine has an estimated residual value of $800,000 at the end of the fourth year. What is the NAL of the lease?
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Related Book For
Financial Management Theory and Practice
ISBN: 978-0176517304
2nd Canadian edition
Authors: Eugene Brigham, Michael Ehrhardt, Jerome Gessaroli, Richard Nason
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