ii. i. Find the before and after tax breakeven rental rates. (4 marks) Under what circumstances...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
ii. i. Find the before and after tax breakeven rental rates. (4 marks) Under what circumstances would it be beneficial for Establishment to buy its own Limos? iii. iv. a. The boyfriend of the daughter of the CEO of Establishment Industries takes her to the senior prom in a pearly white stretch limo. The CEO is impressed. He decides Establishment Industries ought to have one for VIP transportation Establishment's CFO prudently suggests a one year operating lease instead for GHS 75,000 that it plans to lease out for seven years (years 0 through 6). and approaches Acme Limolease for a quote. Suppose Acme buys a new limo Acme's forecasts of operating, maintenance, and administrative costs (the and paperwork, and finding a 'replacement lessee when Establishment's year latter including the costs of negotiating the lease), keeping track of payments is up is GHS 12,000. Assume zero inflation and use a 7% real cost of capital. Also, assume that the tax rate is 21% per annum and that the full amount of the investment can be written off immediately. (3 marks) What are some of the sensible reasons why companies lease assets? (4 marks) What are some of the not so sensible reasons why companies lease assets? (4 marks) ii. i. Find the before and after tax breakeven rental rates. (4 marks) Under what circumstances would it be beneficial for Establishment to buy its own Limos? iii. iv. a. The boyfriend of the daughter of the CEO of Establishment Industries takes her to the senior prom in a pearly white stretch limo. The CEO is impressed. He decides Establishment Industries ought to have one for VIP transportation Establishment's CFO prudently suggests a one year operating lease instead for GHS 75,000 that it plans to lease out for seven years (years 0 through 6). and approaches Acme Limolease for a quote. Suppose Acme buys a new limo Acme's forecasts of operating, maintenance, and administrative costs (the and paperwork, and finding a 'replacement lessee when Establishment's year latter including the costs of negotiating the lease), keeping track of payments is up is GHS 12,000. Assume zero inflation and use a 7% real cost of capital. Also, assume that the tax rate is 21% per annum and that the full amount of the investment can be written off immediately. (3 marks) What are some of the sensible reasons why companies lease assets? (4 marks) What are some of the not so sensible reasons why companies lease assets? (4 marks)
Expert Answer:
Answer rating: 100% (QA)
i Beforetax breakeven rental rate PV CFr 75000 12000007 r 1200075000 016 16 Aftertax breakeven renta... View the full answer
Related Book For
Retail Management A Strategic Approach
ISBN: 978-0132720823
12th edition
Authors: Barry R. Berman, Joel R. Evans
Posted Date:
Students also viewed these finance questions
-
Briefly describe ASCII and Unicode and draw attention to any relationship between them. [3 marks] (b) Briefly explain what a Reader is in the context of reading characters from data. [3 marks] A...
-
3. Consider the following reaction and kinetic data: 2 HgCl2(aq) + C2O4 (aq) 2 Cl-(aq) + Hg2Cl2(aq) + 2CO2(g) Expt. # [HgC](M) [CO2] (M) Initial rate (Ms) 1 0.10 0.15 1.8 x 10-5 2 0.10 0.30 7.2 x...
-
The values of Alabama building contracts (in millions of dollars) for a 12-month period follow: 240 350 230 260 280 320 220 310 240 310 240 230 a. Construct a time series plot. What type of pattern...
-
How do time standards allow the accurate determination of labor costs?
-
Find at least 10 partial sums of the series. Graph both the sequence of terms and the sequence of partial sums on the same screen. Does it appear that the series is convergent or divergent? If it is...
-
OBB Personenverkehr (OBB), the Austrian state-owned railway, carries about 235 million passengers a year on routes within wholly owned by OBB Holding Group, which in turn, is wholly owned by the...
-
Compute the specified ratios using Bryce Companys balance sheet at December 31, 2008. Assets Cash ............... $ 18,000 Marketable securities ......... 8,000 Accounts receivable ......... 13,000...
-
6. For the given first order reaction 7. AB The half life of the reaction is 0.3010 min. The ration of the initial concentration of reactant to the concentration of reactant at time 2.0 min will be...
-
The Kare Counseling Center was incorporated as a not-for-profit organization 10 years ago. Its adjusted trial balance as of June 30, 2020, follows. 1. Salaries and fringe benefits were allocated to...
-
Considering that this is a long term, strategic decision, discuss the factors that might change in the next 10 to 20 years and how the possibility of such changes influences the decision. (13 marks)
-
On 31 March 2022, L Cowal purchased a new computerised machine costing, before trade-in, $27 500 ($25 000 + $2500 GST). The old machine had cost $18 000 and the accumulated depreciation was $7800 to...
-
J Ingenuity purchased two machines for cash on 2 January 2021. Machine 1 cost $8800 ($8000 + $800 GST) and is depreciated at 25% p.a. diminishing balance. Machine 2 cost $11 000 ($10 000 + $1000 GST)...
-
On 1 February 2022, the business purchased on credit and had installed machine 1 for $19 371 ($17 610 + $1761 GST) with a residual value $990 ($900 + $90 GST). The diminishing balance depreciation...
-
On 30 November 2021, a motor vehicle was purchased for cash $45 738 ($41 580 + $4158 GST) with an estimated residual value of $5038 ($4580 + $458 GST) and was to be depreciated using the diminishing...
-
Prepare for S Meredith the accounts receivable control account and accounts payable control account for February 2022. Balance as per accounts receivable control account 31 January 2022 Balance as...
-
Evaluate f- Vx-25 dx using algebraic substitution with k = Vx2 - 25. A. Vx2 25 - 5Arctan Vx-25 + C B. Vx2 25 + 5Arctan Vx2 25 + C | C. 5Vx2 25 - Arctan Vx2-25 + C Vx2-25 D. Vx? 25 + 5Arctan + C
-
Find the image of x = k = const under w = 1/z. Use formulas similar to those in Example 1. y| y = 0 -21 -2 -1 -1, /1 12 T -1 -1 y= -2 x =0
-
List appropriate products for Amazon to market with its Subscribe & Save program.
-
What do you think are the risks of placing too much reliance on merchandising software? Do the risks outweigh the benefits? Explain your answer.
-
A floor tile retailer wants to receive a 35 percent markup (at retail) for all merchandise. If one style of tile retails for $11 per tile, what is the maximum that the retailer would be willing to...
-
Which of these changes would allow you to get closer to the mirage before it vanishes? A. Making the pocket of hot air nearer in temperature to the air above it B. Looking for the mirage on a windy...
-
If you could clearly see the image of an object that was reflected by a mirage, the image would appear A. Magnified. B. With up and down reversed. C. Farther away than the object. D. With right and...
-
A student tries to use a diverging lens as a magnifier. She observes a coin placed at the focal point of the lens. She sees A. An upright image, smaller than the object. B. An upright image, larger...
Study smarter with the SolutionInn App