Financing and advice the company about lease or buy decision

Assignment Help Finance Basics
Reference no: EM132544489

Ross Limited is interested in acquiring the use of a generator costing Rs. 800,000/-. It has two options:

1. to borrow the amount at18% per annum repayment in 5 equal annual instalment at the end of each year or

2. to take on lease the asset for a period of 5 years at the end of each year of Rs. 175,000/-

The corporation tax rate is 35% and the depreciation is allowed on straight line method. The asset will have a salvage value of Rs. 180,000 at the end of the 5th year.

Required:

You are required to evaluate each source of financing and advice the company about lease or buy decision.

Reference no: EM132544489

Questions Cloud

HS2031 Human Computer Interaction Assignment : HS2031 Human Computer Interaction Assignment Help and Solution, Holmes Institute - Assessment Writing Service - Apply knowledge of theoretical foundations
What is the yield to maturity at a current market price : What is the yield to maturity at a current market price of $829? Round your answer to two decimal places.
Total amount of financing used to finance the assets : What is the weight of debt and the weight of equity (common stock) in financing the assets of that firm?
What will be the total interest paid : Hak Young is tired at the end of the semester and decides he really needs a break so he pays for a one week all-inclusive trip to Disney Land with his credit
Financing and advice the company about lease or buy decision : You are required to evaluate each source of financing and advice the company about lease or buy decision.
How long will it take jack to win jill hand in marriage : He has found a managed fund that pays 4.5% annual interest in which he will place the money. How long will it take Jack to win Jill's hand in marriage?
What annual rate of return must kirk earn on investment : What annual rate of return must Kirk earn on his investment to accumulate enough money to pay for the ring?
What is the stock predicted return : If ai = 0, bi = 1.2, ci = -0.4, and di = 1.3, what is the stock's predicted return? Do not round intermediate calculations.
Write an essay on evolution of databases : Identify new technologies that are replacing RDBMS or other traditional approaches - Write an essay on evolution of databases

Reviews

Write a Review

Finance Basics Questions & Answers

  How can resource availability impact the critical path

In narrative form, how can resource availability impact the critical path in Project Mangement

  Second-hand car and have agreed to re-pay

You have borrowed $4670 from you dad to purchase a second-hand car and have agreed to re-pay your dad a lump sum

  The saunders investment bank

The Saunders Investment Bank has the following financing outstanding.  Debt:  120,000 bonds with a coupon rate of 8 percent and a current price quote of 110; the bonds have 20 years to maturity. 290,000 zero coupon bonds with a price quote of 17.5 a..

  Average ratios for industry

Certain financial ratios for Elizabeth Arden for its most recent year below, along with the average ratios for its industry. Based on those ratio

  What nominal annual interest rate is built

payable at the end of each month for 3 years. What nominal annual interest rate is built into the monthly payment plan?

  What is the stock current price per share

Luxx Inc. currently has assets to $5 million, zero debt, is in the 40 percent federal-plus-state tax bracket, has a net income of $1 million, and pays out 40 pe

  What is deep value beta coefficient

What is Deep Value's beta coefficient? Enter your answer rounded to two decimal places. For example, if your answer is 12.345 then enter as 12.35 in the answer

  Anticipating a large amount of current liabilities

A company is anticipating a large amount of current liabilities and although it has limited cash reserves it owns much of its machinery

  Balance corresponds to interest on interest

a. What is the balance in the account after 4years? How much of this balance corresponds to"interest on interest"? b. What is the balance in the account after 32years? How much of this balance corresponds to"interest oninterest"?

  Calculate the first-run npv and irr

calculate the first-run NPV and IRR. Assume that the cash flows for each year are independent of cash flows for other years.. Frequency distributions for NPV and IRR are plotted by the computer, and the distributions' means and standard deviations ar..

  What is the cash flow to creditors for the year

At the beginning of the year, a firm had total assets of $360,000, current liabilities of $28,700, and total equity of $229,000.

  Mortgage banker and mortgage broker

Explain the advantages and disadvantages between a mortgage banker and mortgage broker.

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