Determine the pv of the nal

Assignment Help Finance Basics
Reference no: EM13279248

Treadmill Trucking Company is negotiating a lease for five new tractor/trailer rigs with Leasing International. Treadmill has received its best offer from Betterbilt Trucks for a total price of $900,000. The terms of the lease offered by International Leasing call for a payment of $190,000 at the beginning of each year of the 5-year lease. As an alternative to leasing, the firm can borrow from a large insurance company and buy the trucks. The $900,000 would be borrowed on an amortized term loan at a 10 percent interest rate for 5 years. The trucks fall into the MACRS 5-year class and have an expected residual value of $90,000. Maintenance costs would be included in the lease. If the trucks are owned, a maintenance contract would be purchased at the beginning of each year for $8,000 per year. Treadmill plans to buy a new fleet of trucks at the end of the fifth year. Treadmill Trucking has a total tax rate of 20 percent. Should the firm purchase or lease? Determine the PV of both. Find the NAL.

Reference no: EM13279248

Questions Cloud

What is the real rate of return on these bonds : Bonds outstanding that pay a 5% semiannual coupon, have a 5.5% yield-to-maturity, and a face value of $1,000. The current rate of inflation is 4%. What is the real rate of return on these bonds?
How big is the pressure in the related areas : A space of 100 cm3 and one of 300 cm3 seperated by a capillary tube, in which a tap is arranged, connected. How big is the pressure in the related areas
How many moles of hemoglobin are present in a typical adult : A human body contains 6 liters of blood. The hemoglobin content of blood is about 15.5g/100 mL of blood. The approximate hemoglobin molecular weight is 64,500g/mol. How many moles of hemoglobin are present in a typical adult
What is the effective compound rate of interest : What is the effective, compound rate of interest you earn if you enter into a repurchase agreement in which you buy a Treasury bill that costs $98760 and will be redeemed for $100000 after 90 days?
Determine the pv of the nal : Treadmill Trucking has a total tax rate of 20 percent. Should the firm purchase or lease? Determine the PV of both. Find the NAL.
What was the speed of the meteorite : A 72 kg meteorite buries itself 5.0 m into soft mud. The force between the meteorite and the mud is given by , What was the speed of the meteorite
Calculate the load voltage in transformer for supply voltage : calculate the load voltage in a transformer if supply voltage is 240 Volts. The resistance and inductance refered to the high side are as follows: Req is 29.12 ohms, Xjeq is j12.1 ohms, Rc is 1033 ohms and Xm is j1053 ohms.
Explain a human body contains 6 liters of blood : A human body contains 6 liters of blood. The hemoglobin content of blood is about 15.5g/100 mL of blood. The approximate hemoglobin molecular weight is 64,500g/mol. How many moles of hemoglobin are present in a typical adult?
Determine the work done on the block by the frictional force : A 18.0 kg block is being pushed up a ramp by a force FP = 150 N acting horizontally. Determine the work done on the block by the frictional force

Reviews

Write a Review

Finance Basics Questions & Answers

  Compare the ratios calculated against industry averages

Obtain financial information for Raytheon. You should begin by obtaining an annual report for the company. You should also explore the company's Web site and the Company Directories and Financial Reports.

  What must the coupon rate be on mertons bonds

Merton Enterprises has bonds on the market making annual payments, with 17 years to maturity, and selling for $956. At this price, the bonds yield 9.1 percent.

  Foreign currency gain or loss exchange rate

Which of the following combinations correctly states the relationship between foreign currency transactions, exchange rate changes, and foreign exchange gains and losses?

  Discuss the capital structure of the firm

Discuss the capital structure of the firm and What conclusions can you draw from this example regarding the use of debt

  Make income statement under variable & traditional costing

The E-Corporation manufactures trendy, high-quality moderately valued watches that it sells on the Internet. As the corporation's senior financial analyst, you are asked to analyze the overall profitability fo the current year.

  Capital budgeting question

The budget committee has received the following projects. They are mutually exclusive. The Corporation uses 10 percent as the rate of return.

  What is the net present value of this project

The tax rate is 35%. Your estimated cost of capital is 10%. What is the net present value of this project?

  What will the portfolios new beta

using the proceeds to purchase another stock with a beta of 1.35. What will the portfolio's new beta be after these transactions? Round your answer to two decimal places.

  What are some possible explanations for the hesitancy

Which of the final 12 discussion area would be most difficult for you as a manager to discuss in the organization with your colleagues? Why?

  Computation of future annual payments

Computation of future annual payments and how much income will the grandchild receive each year

  Computation of arbitrage profit

Computation of arbitrage profit and what is the arbitrage opportunity and what would you do as an arbitrager and when would you stop doing it

  How much revenue would have to be realized each year

A machine is purchased for $36,000 and will have a market value (salvage value) of $8,000 at the end of its 8 year useful life. If MARR= 9%, how much revenue would have to be realized each year to recover the cost of capital?

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