Question: the problem can you please show me how where and how the 6% came from and how they got the answer -60,290 please show work.

the problem can you please show me how where and how the 6% came from and how they got the answer -60,290 please show work. thanks

Leasing Example A firm leases an asset worth $100,000 with a 30% CCA rate. The asset will last 7 years. The firm has a 40% tax rate and its kd is 10%. The annual lease payment is $18,500 due in advance. After tax lease payment: ( 1-.4)* 1 8,500-1 1 , I 00 CCA tax shield- Cdt 1+0.5r100,000*3*4 1+ 0.5(06_ 32,390 rd 1+r 06+ .3 1 +.06 Cash flows for lessee (lease vs. buy): 4 Save Purch 100,000 Price A.t. Lease 11,100 -11,100-11,100-11,100-11,100-11,100-11,100 payments Total 88,900 -11,100-11,100-11,100-11,100-11,100-11,100 Tax resent value of shaded amounts (at 6%): -60,290 NAL : 88,900(dont discount because happens now) %0,290 32,390- of depr -3,780 Leasing Example A firm leases an asset worth $100,000 with a 30% CCA rate. The asset will last 7 years. The firm has a 40% tax rate and its kd is 10%. The annual lease payment is $18,500 due in advance. After tax lease payment: ( 1-.4)* 1 8,500-1 1 , I 00 CCA tax shield- Cdt 1+0.5r100,000*3*4 1+ 0.5(06_ 32,390 rd 1+r 06+ .3 1 +.06 Cash flows for lessee (lease vs. buy): 4 Save Purch 100,000 Price A.t. Lease 11,100 -11,100-11,100-11,100-11,100-11,100-11,100 payments Total 88,900 -11,100-11,100-11,100-11,100-11,100-11,100 Tax resent value of shaded amounts (at 6%): -60,290 NAL : 88,900(dont discount because happens now) %0,290 32,390- of depr -3,780

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Alpha Corporation owns 90% of the ordinary shares of Beta Corporation and uses the equity method to account for its investment. On January 1, Year 4, Alpha purchased $160,000 of Betas 10% bonds for...

Here is some good news. You have just won a lottery that will pay you nine (9) payments. The first payment will be $25,000 today. Subsequent payments will occur annually and increase by 2% each year....

please answer question #11 and #12 thanks please show all the work, not in excel PART B: SHORT ANSWER. Answer in the space provided. You must show all of your work and provide explanations where...

need help solving the whole problem. please show work to help understand where the answer came from 13. Sway's Back Store is considering a 7-year proiect which will require the purchase of $2 million...

Assess the severity of the legal risk for each complaint. Include a summary of the plaintiff's case and potential defenses against each claim. Address the severity of potential legal liability....

Please complete. I will rate, thanks! 5. Please read the case titled Term Sheet Negotiations for Trendsetter, Inc." to answer the following questions. In the Alpha Ventures Term Sheet presented in...

1) Critically evaluate how has the enterprise value of the Cape Union Mart moved over the past 5 years and from this assessment, what has been the significant driver. Based on your analysis, advise...

Tallahassee bean counters case solution and all the 5 questions beginning of the case. Also describe about equipment purchased fraud and how it was committed? NOTICE Do not make Teaching Notes...

hello, can you please help me answer the questions attached. Attached is the case merger and sample write-up. Its be in Times New Roman 12-point font, double-spaced and 4 pages. Any supporting...

Course Name: Cultural Diversity Management. Study the case study and answer all questions. Case 4 Hailing a New Era: Haier in Japan As one of the most valuable brands in China, Haier designs,...

this isHVAC Financial Analysis and a case. You have to look at the case to be able to solve the problems and to be able to write a 2 page paper questions ask about the case. Please take a look at...

What is a 1245 asset? How is it related to a 1231 asset?

Great West States (GWS) is a railroad company operating in the Western United States. Juanita Salazar is risk manager of GWS. At the direction of the company's chief executive officer, she is...

When a business wants to change an accounting method for tax reporting, such as the cost-flow method used for inventory, what body must give permission for the change? Multiple choice question....

Draw a class diagram and its relationship based on the following statements. You can use any UML tool/software to represent your class diagram. Do NOT copy and paste your diagram, use the attachment...