Question: please answer me asap Block, Hirt, Danielson and Short: 12ce Problem 1632(LO6) Lease vi. borrow to purchase analysis Orwell Futures has decided to acquire a

please answer me asap  please answer me asap Block, Hirt, Danielson and Short: 12ce Problem
1632(LO6) Lease vi. borrow to purchase analysis Orwell Futures has decided to

Block, Hirt, Danielson and Short: 12ce Problem 1632(LO6) Lease vi. borrow to purchase analysis Orwell Futures has decided to acquire a treveling machine. Its cost is 575,000 . In five years it can be salvaged for 525,000 . Friendly Loansharks has agreed to advance funds for the entire purchase price at 9 percent per annum payable in equal installments at the end of each year over the five years. As an alternative, the machine could be leased over the five years from the manufacturer, Ageless ventures, with annual least payments of $15,800 payable at the beginning of each year. Orwell Futures' tax rate is 25 percent. its cost of capital is 15 percent, and its tax shields are realized at the end of the year. Traveling machines have a cCA rate of 30 percent. If the machine is owned, annual mainteriance costs will be 5750 . should Orwell Futures lease or buy its machine? Show all calculations. Borrow to purchase option: Initial cost PV of annual loan payments and tax savings from interest expense. Present value of salvage Tax shield from CCA PV of annual maintenance pymt NPV (net present value) Lease option: Present value of pavments Py of tax savings on payments NPV (net present value) NPV of lease alternative: - relative to borrowing

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