Company abc inc has just sold an asset

Assignment Help Finance Basics
Reference no: EM132354613

Company ABC Inc has just sold an asset for $2.3 million for the purpose of self-financing a capital expansion program that may include purchase of a piece of manufacturing equipment for $1.6 million. The company's tax rate is 25%, its required rate of return is 11%, the estimated salvage or recovery value of the equipment at the end of 3 years is $450,000. Given the high-tech nature of its industry, the conservative approach is to use a depreciable life of 3 years on a straight line basis. The alternative is to lease the same piece of equipment for $425,000 over the same period. Should ABC lease or buy? Show your work to justify your decision or recommendation.

Reference no: EM132354613

Questions Cloud

Company recognize on income statement : Annual Fixed cost are $24,000. If Bubble's sells 10 units less than breakeven, how much lost would the company recognize on its income statement?
Team leadership and discuss your learning outcomes : Review at least four academically reviewed articles on Team Leadership. Develop power presentation based on the articles.
Concept of the time value of money using a mortgage : Could you explain the concept of the time value of money using a mortgage as an example?
Prepare the stockholders equity section immediately : The stockholders' equity section of Jun Company's balance sheet as of April 1 follows. On April 2, Jun declares and distributes a 10% stock dividend.
Company abc inc has just sold an asset : Company ABC Inc has just sold an asset for $2.3 million for the purpose of self-financing a capital expansion program that may include purchase of a piece
Define capabilities of digital asset management software : First, the in-house team was severely challenged by the fact that the project was already 18 months behind schedule when they began work on the project.
What is global cost of retained earnings : What is Global's cost of retained earnings if it can use retained earnings rather than issue new common stock
Development and implementation of the delivery system : SBM1204 Project Delivery Systems Assignment, Asia Pacific International College, Australia. Development and implementation of the delivery system
Potential employment opportunities and utilize persuasive : The purpose of assignment is to identify potential employment opportunities and utilize persuasive and professional writing skills to create job search material

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd