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As a financial analyst for Muffin Construction, you have been asked to recommend the method of financing the acquisition of new equipment needed by the firm. The equipment has a useful life of 8 years. If purchased, the equipment, which costs $700,000, will be depreciated under MACRS rules for 7-year class assets. If purchased, the needed funds can be borrowed at a 10 percent pretax annual rate. Muffin's weighted after-tax rate of capital is 12 percent. The actual salvage value at the end of 8 years is expected to be $50,000. Muffin's marginal ordinary tax rate is 40 percent. Annual, beginning-of-year lease payments would be $160,000.
a. Compute the net advantage to leasing.
b. Should Muffin lease or own the equipment?
A person wins $10,000 in a state lottery. He plans to deposit this money in a savings account to earn 8% annual interest for 6 years. If he wants to withdraw equal annual amounts from the account for 6 years, starting with the first withdrawal one ye..
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Find out who the producers of PVC pipe are in the US and call up the plant and talk to the plant manager or the sales manager.
Assume a bank loan requires an interest payment of $85 a year and principal payment of $1,000 at the end of the loan date/year life. How much this loan could be sold for to another bank if the loans of similar quality care of a 8.5% interest rate tha..
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Fargo Memorial Hospital has annual net patient service revenues of $14,400,000. It has two major third-party payers, plus some of its patient is self-payers. The hospitals patient accounts manager estimates that 10% of the hospitals paying patients (..
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Farm Machinery stock currently sells for $65 per share. The market requires a return of 14 percent while the company maintains a constant 8 percent growth rate in dividends. What was the most recent annual dividend per share paid on this stock?
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