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The Olsen Company has decided to acquire a new truck. One alternative is to lease the truck on a four-year contract for a lease payment of $10,000 per year, with payments to be made at the beginning of each year. The lease would include maintenance. Alternatively, Olsen could purchase the truck outright for $40,000, financing with a bank loan for the net purchase price, amortised over a four-year period at an interest rate of 10 percent per year, payments to be made at the end of each year. Under the borrow-to-purchase arrangement, Olsen would have to maintain the truck at a cost of $1,000 per year, payable at year-end. The truck falls into the MACRS 3-year class. It has a salvage value of $10,000, which is the expected market value after four years, at which time Olsen plans to replace the truck irrespective of whether it leases or buys. Olsen has a marginal tax rate of 40 percent.
Should the truck be leased or purchased? Provide your decision based on NPV analysis.
Currency derivatives are very useful to global financial managers to hedge FX risk, but they can also be used by speculators.
What is the Fisher effect? - How does interest rate parity differ from purchasing power parity? - Is it possible that PPP holds for some goods but not others?
A firm has total debt of $1,010 and a debt-equity ratio of .33. What is the value of the total assets?
The Oceanside hotel is adjacent to city coliseum, a 24,000-seat arena that is home to city's professional basketball and ice hockey teams and that hosts a many concerts, TV shows.
Using the binomial pricing model, calculate the price of a two-year call option on MMX stock with a strike price of $9.
Discuss the formation of the European Union, and the introduction of the Euro. Discuss the key legal and financial steps did they take to achieve the EU and enter into a common currency, and the challenges they faced (include a timeline).
Required: What is the amount to use as the annual sales figure when evaluating this project?
maple corporations stockholders equity at june 30 2000 consisted of the followingpreferred stock 10 50 par value
How much can Nelson's short-term debt (notes payable) increase without pushing its current ratio below 1.4? Round your answer to the nearest cent.
If the yield for similar bonds is 5.4 percent, what should be the price for this bond? (Assume $1000 par value)
Year 2010 ending retained earnings were $2 million. Year 2011 forecasted sales are $100,000 with a 25% net margin and a 20% dividend payout ratio.
And what absolute increase in units sales and dollar sales will be necessary to maintain the level of total contribution dollars if the price of each product is reduced by 10 percent?
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