Leasing a new computer, Find out the after-tax cash flow

Leasing a new computer

Assignment Help Finance Basics

Reference no: EM1329957

1) Your firm is considering leasing a new computer. The lease lasts for 9 years. The lease calls for 10 payments of $1,000 per year with the first payment occurring immediately. The computer would cost $7,650 to buy and would be straight-line depreciated to a zero salvage over 9 years. The actual salvage value is negligible because of technological obsolescence. The firm can borrow at a rate of 8%. The corporate tax rate is 30%.

What is the after-tax cash flow from leasing relative to the after-tax cash flow from purchasing in years 1-9?

2) Your firm is considering leasing a new robotic milling control system. The lease lasts for 5 years. The lease calls for 6 payments of $300,000 per year with the first payment occurring at lease inception. The black box would cost $1,050,000 to buy and would be straight-line depreciated to a zero salvage. The actual salvage value is zero. The firm can borrow at 8%, and the corporate tax rate is 34%.

What is the maximum lease payment that you would be willing to make?

Reference no: EM1329957

Questions Cloud

Equivalent annual cost over machine life : Two machines, A and B, which carry out the same functions, have the following costs and lives. Which machine would you choose? Justify your decision.

Identify the competitors in the market : Identify the competitors, if any, in the market you have selected. My selected market is water purifiers of Amway. Describe how you could position your product relative to others in the marketplace.

Make another java program that decrypts the file : however there are complex encryption techniques, you should come up with a simple one of your own. For example, you could read the first file one character at a time, and add 10 to the character code of each character before it is written to the s..

Elucidate managers can reduce their firms financing cost : Elucidate how managers can reduce their firm's financing cost.

Leasing a new computer : Find out the after-tax cash flow from leasing relative to the after-tax cash flow from purchasing in years 1-9? Find out the maximum lease payment which you would be willing to make?

Explain strategic opportunities for e-commerce : Explain strategic opportunities for e-Commerce enabled supply chains

The corporate strategy : Suppose you are the CEO of Nike and the world is coping with an economic recession. Please give an example of why you would change the corporate strategy and what changes you would make for what reason.

Prompts the user to enter the number of students : Write down a Java program that prompts the user to enter the number of students and each student's name and score, and finally displays the student with the highest score and the student with second-highest score.

Illustrate what impact could this have on the production : Illustrate what impact could this have on the level of production and therefore the unemployment rate.

User Account

All Pages