Determine what is the net advantage to leasing in thousands

Assignment Help Financial Econometrics

Reference no: EM13336141

Kohers Inc. is considering a leasing arrangement to finance some manufacturing tools that it needs for the next 3 years. The tools will be obsolete and worthless after 3 years. The firm will depreciate the cost of the tools on a straight-line basis over their 3-year life. It can borrow $4,800,000, the purchase price, at 10% and buy the tools, or it can make 3 equal end-of-year lease payments of $2,100,000 each and lease them. The loan obtained from the bank is a 3-year simple interest loan, with interest paid at the end of the year. The firm's tax rate is 40%. Annual maintenance costs associated with ownership are estimated at $240,000, but this cost would be borne by the lessor if it leases. What is the net advantage to leasing (NAL), in thousands?

Reference no: EM13336141

Questions Cloud

Find out the geometry or shape of a mgh2 molecule : Determine the geometry or shape of a MgH2 molecule. Check those statements which are correct. Help: VSEPR Choose at least one answer. a. There are 4 valence electrons. b. There are 8 valence electrons.

How much work does the father do : A father pulls his young daughter on a sled with a constant velocity on a level surface a distance of 10m. how much work does the father do

What is the amount of the contingent deferred sales load : Calculating Contingent Deferred Sales Loads. Ted Paulson needed money to pay for unexpected medical bills. To obtain $6,000, he decided to sell some of his shares in the Ridgemoor Capital Appreciation Fund.

What is the angle between the spokes expressed in radians : A wheel has 8 evenly spaced spokes. What is the angle between the spokes expressed in radians

Determine what is the net advantage to leasing in thousands : Kohers Inc. is considering a leasing arrangement to finance some manufacturing tools that it needs for the next 3 years. The tools will be obsolete and worthless after 3 years.

Calculate the orbital period of the planet : A planet of mass m = 1.35 × 10^24 kg is orbiting in a circular path a star of mass M = 7.35 × 10^29 kg. What is the orbital period (in earth days) of the planet Tplanet

Determine what is the current price of wal-mart stock : A bond is issued at $1,000 par value during a time in which interest rates for similar bonds were 8%. Today new bonds issued with a similar credit worthiness is 10%.

Find the resultant velocity of the board : A dog with a mass of 20 kg is sitting on a board with a mass of 5 kg. The board is on ice and is free to slide without friction. What is the resultant velocity of the board

What will the image position be : A small object is placed to the left of a convex lens and on its optical axis. The object is 30 cm from the lens, which has a focal length of 20 cm. what will the image position be

User Account

All Pages