Question: After analyzing a five-year project using the NiV onierion, you, te Anancial manager of Presale On Dring ic, have dedica to gro ahead with the
After analyzing a five-year project using the NiV onierion, you, te Anancial manager of Presale On Dring ic, have dedica to gro ahead with the proposed projed and purchase equloment costing S1.A5 millon, The projed wil yeld incernesial pre za ash ntoes of $350,000 per year for tie next five years. The equioment balongs to me asset dass with a Ech rate ol 30%h, and the equipment eil ba worthless at the end of the protects lite. The asset dass will remain open alter ine end of the profes. hitsale al borron the t.5 million freca the Royal Canadan Bank at 10% compounded amualy. The companys marginal corarate tax rete, s 301. Batore purchasing line equipment, you decide that it might he worthwhile to check nut the haing attemative. You coat the manage. of We-Lease- It-Al Corp. and obtain tie following quote: Lease term: five years Lease payment: $375,000 per year Lease payment due: beginning of each year You will have to decide whether you should lease or buy the equipment based on the avable information. *** The break-ever lease payment is 12 marks O a. $243,750.00 0 b. $1,045,605.83 O C $363,465.33 d. $40439417 O c. $236,252.46
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
