Should you lease or buy

Assignment Help Accounting Basics
Reference no: EM133102938

Question - Your firm has just sold non-strategic assets to raise cash for capital investment while avoiding the use of debt. The firm may buy a piece of machinery for $140,000 [with a useful or depreciable life of 4 years]. Your pretax cost of capital is 8% [and your tax rate is 20%]. You can lease the machine for $43,500 per year and the estimated salvage/recovery value at the end of four years [based on actual market data] is $20,000. Should you lease or buy? Explain by showing your work.

Reference no: EM133102938

Questions Cloud

Analyze the business environment and potential market : Company X in Dubai intends to enter the insurance market in Japan. Please analyze the business environment and potential market when expanding the insurance bus
Why we use constraints in a database. : Explain why we use constraints in a database. Describe two constraints and how those constraints affect data that goes into a table.
Export-import policies and practices : Chapter 1: Growth and Direction of International TradeQuestion: Discuss the importance of international trade to national economies.
Dimensions of emotional intelligence : How would you rate yourself on each of the two dimensions of emotional intelligence presented in achieving emotional balance in a chaotic world?
Should you lease or buy : The firm may buy a piece of machinery for $140,000 [with a useful or depreciable life of 4 years]. Should you lease or buy
Distributions and market entry : Company X in Dubai intends to enter the insurance market in Thailand.
Dismantle systems of discrimination and subordination : How leaders' behavior and mindset could be changed to dismantle systems of discrimination and subordination?
Calculate the cost of goods sold under absorption costing : During the most recent year, Wicks Company had the following data: Units produced 10,000. Calculate the cost of goods sold under absorption costing
What are the challenges facing delta pacific : What are the challenges facing Delta Pacific? What change initiative would be most effective to implement within this organization?

Reviews

Write a Review

Accounting Basics Questions & Answers

  Prepare a production budget for lowell company

Lowell Company makes and sells artistic frames for pictures. Prepare a production budget for Lowell Company by month and for the first quarter of the year

  A company used the percent of sales method to determine its

a company used the percent of sales method to determine its bad debts expense. at the end of the current year the

  Determine the balances to be presented in the statement

Determine the balances to be presented in the statement of comprehensive income and statement of financial position as of December 31, 2020

  Journalize the stock transactions of Vidalia Company

On September 1, 2017, 3,000 treasury shares are sold at $6 per share. Journalize the stock transactions of Vidalia Company in 2017

  What amount will reported as expenditures for debt service

During 2019 the Zeppelin City Debt Service Fund paid $16600 towards general long-term debt principal, What amount will reported as Expenditures for Debt Service

  What is governance mechanism

What is governance mechanism? Compare and contrast the internal and external governance mechanisms and highlight which type of governance mechanism

  Journalize the entries by Herrera Corporation

Journalize the entries by Herrera Corporation to record the following information: Tran Corp. reports net income of $600,000 for the current period

  At the beginning of her current tax year angela purchased a

at the beginning of her current tax year angela purchased a zero-coupon corporate bond at original issue for 46000 with

  How do estimate the cost of the inventory lost in the fire

Alpine's normal gross margin percentage is 51%. Use the gross margin method to estimate the cost of the inventory lost in the fire.

  The capital accounts of jonathan faber and faheem ahmad

the capital accounts of jonathan faber and faheem ahmad have balances of 150000 and 110000 respectively. lauren wells

  What is the amount of deductible §expense for the year

Woolard is concerned about future limitations on its §179 expense. How much §179 expense should Woolard expense this year if it wants to maximize

  Present the shareholders equity in statement of financial

Present the shareholders' equity in the statement of financial position. P400,000 was received on the above subscription to preference shares.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd