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Presby Memorial Hospital plans to acquire a 3 tesla MRI, with a 5-year MACRS life (but a 10-year useful life), at a cost of $2 million plus $250,000 delivery and installation. Presby can borrow the $2.25 million at 10%, interest only until the repayment in 5 years. Alternatively, Presby can lease the equipment for five years at a rental charge of $460,000 per year, at the beginning of the year. The equipment, when used for five years, will have an estimated net salvage value of $500,000. If Presby buys, it will own the equipment at the end of five years. If Presby leases, it will not exercise the option to buy the equipment. The lease includes maintenance service, whereas if bought, the equipment would require maintenance provided by a service contract for $25,000 per year, at the end of the year. The equipment falls into the MACRS five-year class life (20.00%, 32.00%, 19.20%, 11.52%, 11.52%, 5.76%), and the depreciable basis is the original cost. Presby is not taxed. Determine the Net Advantage to Leasing (NAL) for Presby
What is the weight of each asset in the portfolio of the two assets that has the largest possible Sharpe ratio?
What is the opportunity cost of the President's decision to stick with both types of grass - Calculate the impact of the exhibit on company profit.
What other instrument is the same as a 5-year zero-cost collar where the strike price of the cap equals the strike price of the floor? What does the common strike price equal?
An agribusiness has the opportunity to invest in new energy saving equipment that will generate annual savings of $150,000 per year for the next 28 years. The equipment costs $535,185. The firm normally earns 12 percent on its capital investments. De..
Bobcat a US based manufacturer of industrial equipment just purchased a korean company that produces plastic nuts and bolts for heavy equipment.
What is the yield to call if they are called in 5 years? Which yield might investors expect to earn on these bonds? why?
The loan is for six years at 3% interest with monthly payments, and monthly payments begin one month after purchasing the car.
Critically evaluate the significations of “Markowitz Efficient Frontier”.
Determine the current yield on a corporate bond investment that has a face value of $1060, pays 9 percent, and has a current price of $1220.
At what interest rate would you be indifferent between the two? How about at interest rates below the break-even rate?
The Environmental Filter Company is planning to sell air filter systems for $3,500 per unit. What is the dollar value of sales necessary to break even?
Define and discuss MM Proposition I with its implications, and the roles of homemade leverage and the Law of One Price in the development of the proposition.
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