Solution-Machine beyond the expiration of the lease

Machine beyond the expiration of the lease

Reference no: EM131341047

Big Sky Mining Company must install $1.5 million of new machinery in its Nevada mine. It can obtain a bank loan for 100% of the purchase price, or it can lease the machinery. Assume that the following facts apply:

1. The machinery falls into the MACRS 3-year class.

2. Under either the lease or purchase, Big Sky must pay for insurance, property taxes, and maintenance.

3. The firm's tax rate is 40%.

4. The loan would have an interest rate of 15%.

5. The lease terms call for $400,000 payments at the end of each of the 4 years.

6. Assume that Big Sky Mining has no use for the machine beyond the expiration of the lease. The lease has an estimated residual value of $250,000 at the end of the 4th year.

Reference no: EM131341047

Questions Cloud

Declare two variables of type string : Declare a third variable of type string and initialize it with the value of the variable of type object (you should use type casting).

Which would be accurate for the attrition rate for the study : Which of the following would be accurate for the attrition rate for this study? Which of these statements would be considered to be inclusion criterion for the sample in the research article? Select all that apply.

Value of the option to wait : Should Wilson's decide to wait one year to commence this project, the initial cost will increase by 5% and there is a 70 percent probability that cash inflows will increase to $7,800 a year and a 30 percent probability that cash inflows will only ..

Find the description of the system.console class : Install and make yourself familiar with Microsoft Visual Studio and Microsoft Developer Network (MSDN) Library Documentation.

Machine beyond the expiration of the lease : Assume that Big Sky Mining has no use for the machine beyond the expiration of the lease. The lease has an estimated residual value of $250,000 at the end of the 4th year.

Calculate the value of inventory as at 30 september 2005 : At 30 September 2005 Ballata had the given inventories:- Calculate the value of inventory as at 30 September 2005.

Why were mao zedong and his communist red army defeat : Why were Mao Zedong and his communist Red Army able to defeat Chiang Kai-shek and his Nationalist Army in 1948-49 and establish a Marxist-Communist-Maoist type government in China?

What are three of the problems facing latin america today : What are three of the problems facing Latin America today? Give sufficient details to make your case clear.Global interdependence has made some things better and some things worse. Describe three world trends which improve life and three which are..

Write a program that finds the greatest of given 5 numbers : Write a program that, depending on the user's choice, inputs int, double or string variable. If the variable is int or double, the program increases it by 1. If the variable is a string, the program appends "*" at the end. Print the result at the ..

User Account

All Pages

Machine beyond the expiration of the lease

Reference no: EM131341047

Reference no: EM131341047

Questions Cloud

Reviews

Write a Review

Finance Basics Questions & Answers

Briefly describe each of the following financial

What will be their optimal upper cash limit

Reducing the interest due on a loan

Compute the total value of the 90 bonds

Prepare a multiple-step income statement for banting co

Determine the continuously compounded rate of interest

What is mr. warner cost of not taking the cash discount

Far north telecom ltd of ontario has organized a new

What is the value of your investment in stock a

Te term structure of swap rates is 1-year 250 2-year 300

What is a backwardation market

Compute the efficiency variances for direct labor and

Assured A++ Grade

Academics

Major Subjects

Majors

Get In Touch

TERMS & POLICIES

HELP & SUPPORT