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Kohlers Inc. is considering a leasing arrangement to finance some manufacturing tools that it needs for the next three years. The tools will be obsolete and worthless after three years. The firm will depreciate the cost of the tools over their three-year MACRS class life (.33, .45, .15, .07). Kohlers can borrow $4,800,000, the purchase price, at 10% and buy the tools, or it can make three equal, end-of-the-year payments of $2,100,000 each and lease them. The loan is a 3-year simple interest loan, with interest paid at the end of each year. The firm's tax rate is 40%. Annual maintenance costs associated with ownership are estimated at $240,000, but this cost would be covered by the lessor if Kohler leases. What is the net advantage to leasing (NAL), in thousands? (drop three zero's in your calculations.)
Give two examples of financial risk which occur in other personal or business activities. What Global Cost is and what it means to have availability of Capital.
Determine the value of a six-month European call option on the shares of HSBC with a strike price of $65 using a binomial option pricing model.
Jania makes $2,130 in January of this year. If her employer is entitled to the maximum FUTA credit, what SUTA and FUTA tax does her employer owe on these wages if the SUTA tax rate is 5.4%? If all of the employees wages were excluded from the state u..
Hastings Corporation is interested in acquiring Vandell Corporation. Vandell has 1 million shares outstanding and a target capital structure consisting of 30% debt. Vandell's debt interest rate is 7.3%. What is the value of its tax shields? What is ..
The smaller the synergistic benefits of a particular merger, the greater the scope for striking a bargain in negotiations, and the higher the probability that the merger will be completed. Since mergers are frequently financed by debt rather than equ..
Jan 38,452 Feb 35,290 Mar 47,212 Apr 27,4114 May 38,452 June 35,290 July 27,114 Aug 47,212 Sep 38,452 Oct 47,212 Nov 35,290 Dec 27,114. The company has estimated expenses as follows: Calculate the cash outflows for June.
BUSN119-821 - Environmental and Competitive Analysis Assignment - Conduct a PESTLE (political, economic, socio-cultural, technological, legal and environmental
Which way is better, a forward hedge or a money market hedge?
You hold a portfolio of stocks consisting of the following: Stock Beta Current Value Caterpillar 0.6 $20,000 CitiCorp 0.8 $21,000 Wendy’s 1.0 $22,000 Boeing… 1.2 $27,000 Total: $90,000 a. What is the beta of the portfolio?
A capital investment is expected to achieve long-term benefits for the organization. These benefits generally fall into three categories. Identify and discuss these categories. Is there one category that seems to be more important than the others? Ar..
The ABC Company has gathered the following information about the cash flows associated with a capital budgeting opportunity. The Project will cost $10,000,000 to implement, and has a three year estimated economic life. What are the annual net cash fl..
What is a dividend reinvestment plan (DRIP), and how does it work?
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