Reference no: EM132569661
Roberts Company, a small machine shop, is contemplating acquiring a new machine that costs $24,000. Arrangements can be made to lease or purchase the machine. The firm is in the 40% tax bracket. The firm would obtain a 5-year lease requiring annual end-of-year lease payments of $6,000. All maintenance costs would be paid by the lessor, and insurance and other costs would be borne by the lessee. The lessee would exercise its option to purchase the machine for $1,200 at termination of the lease.
The firm would finance the purchase of the machine with a 9%, 5-year loan requiring end-of-year installment payments of $6,170. The machine would be depreciated by 20% in year 1, 32% in year 2, 19% in year 3, and 12% in years 4 and 5. The firm would pay $1,500 per year for a service contract that covers all maintenance costs; insurance and other costs would be borne by the firm.
The firm plans to keep the machine and use it beyond its 5-year recovery period.
i. Find the after-tax cash outflows for each year under the lease alternative.
ii. Find the after-tax cash outflows for each year under the purchase alternative.
iii. Calculate the present value of the cash outflows associated with the lease and purchase alternatives using the after-tax cost of debt as the discount rate.
iv. Choose the alternative with the lower present value of cash outflows from Step 3. It will be the least-cost financing alternative.
Please donot copy from chegg or any other website I needed unique work and please could you explain in detail (ASAP)
Please show all the calculations, and formula used.
What are the expected values of these stocks next year
: What are the expected returns for each of the three stocks next year?
|
What the gain should be included in
: P400,000 for equipment on January 5, 2017. The equipment is valued at P410,000 on December 31, 2017. The P10,000 gain should be included in
|
Calculate basic and diluted earnings per share
: Cumulative $8, preferred shares, no par, 6,000 shares issued and outstanding $600,000. Calculate basic and diluted earnings per share for 2012
|
Heart Rate-Blood Pressure and Hypertensive Retinopathy
: Is the high resting heart rate, intermittent arrhythmia and high blood pressure associated with the increased catecholamine production of the adrenal medulla?
|
Find the after-tax cash outflows for year under
: Roberts Company, a small machine shop, is contemplating acquiring a new machine that costs $24,000. Arrangements can be made to lease or purchase the machine
|
Which true for jones company owns large warehouse that plan
: The Jones Company owns a large warehouse that it plans to sell. Which is true? If the asset is classified as being held for sale, it qualifies as a discontinued
|
Subject-financial management
: You are analysing Jilani's Jewellery (JJ) stock for a possible purchase. JJ just paid a dividend of Rs.8.25 yesterday. You expect the dividend to grow
|
Make the entry to record the interest expense at April
: Make the entry to record the interest expense at April 1, 2013. Assume that interest payable was credited when the bonds were issued (round to nearest dollar)
|
Calculate the amount of cost of goods sold shown
: Calculate the amount of cost of goods sold shown on THE Company's 2022 income statement. THE Company's 2022 statement of cash flows reported cash paid
|