Industrial Mfg. Inc. requires additional equipment for its operations during the next 3 years. The equipment...
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Industrial Mfg. Inc. requires additional equipment for its operations during the next 3 years. The equipment costs $80,000, with a usable life of 3 years (straight-line depreciation). The firm can secure money to buy the equipment with a bank loan for $80,000. The interest rate is 10% and interest is due at the end of each year. In contrast, the cost to lease the equipment is $40,000 at the end of each year for 3 years. If the firm's tax rate is 25%, what is the net cash flow in Year 1 from borrowing and buying (in Year O)? Answer in dollars with NO punctuation, e.g. 88000, and round your answer to the nearest dollar. Do not include any negative signs, commas, dollar signs, or periods in your answer. Just numbers. Industrial Mfg. Inc. requires additional equipment for its operations during the next 3 years. The equipment costs $80,000, with a usable life of 3 years (straight-line depreciation). The firm can secure money to buy the equipment with a bank loan for $80,000. The interest rate is 10% and interest is due at the end of each year. In contrast, the cost to lease the equipment is $40,000 at the end of each year for 3 years. If the firm's tax rate is 25%, what is the net cash flow in Year 1 from borrowing and buying (in Year O)? Answer in dollars with NO punctuation, e.g. 88000, and round your answer to the nearest dollar. Do not include any negative signs, commas, dollar signs, or periods in your answer. Just numbers.
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Answer rating: 100% (QA)
i Interest amount for year 1 80000 10 8000 ii Depreciation amount 80000 3 years 2666... View the full answer
Related Book For
Principles Of Managerial Finance
ISBN: 978-0136119463
13th Edition
Authors: Lawrence J. Gitman, Chad J. Zutter
Posted Date:
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