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Socks Ltd manufactures socks and legwarmers and wants to expand its Product line. The management of the company has indicated that a new machine is required to manufacture a new line of brightly colored socks. To purchase the machine, it has negotiated financing with a favorable before tax cost of 3% interest per annum with equal annual installments. Alternatively, the company can enter into a direct financial lease with the manufacturer of the machine, which means that the manufacturer will offer the machine and maintenance on it for the useful life of the machine at a cost of R130 000 per year, paid at the start of each year for three years.
The machine costs R400 000 and it is expected that it will require maintenance of R70 000 per year, if bought. It is also expected that the machine can be sold for R200 000 at the end of its useful life of three years. The machine can be depreciated by way of the straight-line method over a period of three years.A tax rate of 28% is applicable. The company has a before tax cost of debt of 11%. Required: Problem 1: Determine the net advantage of leasing and advise the company on the option they should take based on your findings.
a customer has asked clougherty corporations to supply 4000units of product m97 with some modifications for 40.10 each.
Albatross had 10,000 shares of treasury stock that they held all year. Compute the weighted average number of common shares outstanding for the year
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At the end of the case, Nicholas Corrochano praises Cisco, which offers products and services to support all these capabilities. However, so do other vendors. Given that, do you feel that Corrochano comments were appropriate?
the following information was available for pete company at december 31 2014 beginning inventory 90000 ending inventory
Beth, who died in January 2012, was survived by her husband, Ben. What is Ben's basis in the real estate after Beth's death
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The purpose of the equivalent-unit computation is to: convert partially completed units into the amount of completed output units that could be made with that quantity of input
Morganton Company makes one product, What are the expected cash collections for July? What is the accounts receivable balance at the end of July?
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