What are the nal and irr of the lease

Assignment Help Financial Management
Reference no: EM13502344

HealthPlan Northwest must install a new $1 million computer to track patient records in its three service areas. It plans to use the computer for only three years, at which time a brand new system will be acquired that will handle both billing and patient records. The company can obtain a 10 percent bank loan to buy the computer or it can lease the computer for three years. Assume that the following facts apply to the decision:The computer falls into the three-year class for tax depreciation,so the MACRS allowances are 0.33, 0.45, 0.15, and 0.07 in Years1 through 4, respectively.The company's marginal tax rate is 34 percent.Tentative lease terms call for payments of $320,000 at the end of each year.The best estimate for the value of the computer after three years of wear and tear is $200,000.a. What are the NAL and IRR of the lease? Interpret each value.b. Assume now that the bank loan would cost 15 percent, but all other facts remain the same. What is the new NAL? The new IRR?

Reference no: EM13502344

Questions Cloud

Determine the combined mass of this canoe and rider : Two canoes are tied together and traveling down a river with the current. Spotting a waterfall, the two canoeists cut the rope, What is the combined mass of this canoe and rider
Value on the ownership position in briarwood hospital : What impact would change have on the equity value of the business and what if the growth rate were only 2 percent?
Explain the molar equilibrium constant is found : You place 25 moles of a monomer in a flask. It equilibrates to form a dimer by the following reaction. The molar equilibrium constant is found to be 3.5. monomer ( ) dimer or restated 2A ( )A2, What are the concentrations of the monomer and dimer i..
Strategic plan : Strategic plan
What are the nal and irr of the lease : Interpret each value.b. Assume now that the bank loan would cost 15 percent, but all other facts remain the same. What is the new NAL? The new IRR?
Explain what is the ph of sodium phenolate : What is the pH of 0.185M sodium phenolate (C6H5ONa), the sodium salt of phenol (Ka= 1.0 X 10-10)
Health leadership competency model : Health Leadership Competency Model
Determine the ph during the titration of triethylmine : Find the pH during the titration of 20.00mL of 0.1000M triethylmine, Kb=5.2x10^-4, with 0.1000M HCl solution after the addition of 10.00mL of titrant
What is the new nal : What are the NAL and IRR of the lease and interpret each value - Assume now that the salvage value estimate is $300,000, but all other facts remain the same. What is the new NAL? The new IRR?

Reviews

Write a Review

Financial Management Questions & Answers

  Foreign company acquisition

Acquisition by a foreign company and the effects of that decision and the results of foreign exchange in Euro and the exchange rate differences.

  Financial management for profit and non profit organizations

In this essay, we are going to discuss the issues of financial management in a non-profit organisation.

  Method for estimating a venture''s value

Evaluate venture's present value, cash and surplus cash and basic venture capital.

  Replacement analysis

This document show the Replacement Analysis of modling machine. Is replacement give profit to company or not?

  Business finance task - capital budgeting

Your company is considering using the payback period for capital-budgeting. Discuss the advantages and disadvantages of this technique.

  Analysis of the investment

In this project, you will focus on one of these: the additional cost resulting from the purchase of an apple press (a piece of equipment required to manufacture apple juice).

  Conduct a what-if analysis

Review the readings and media for this unit, including the Anthony's Orchard case study media. Familiarise yourself with the Anthony's Orchard company and its current situation.

  Determine operational expenditures

Organisations' behaviour is guided by financial data. In the short term, such data will help determine operational expenditures; in the long term, historical data may help generate forecasts aimed at determining strategic plans. In both instances.

  Personal financial management

How much will you have left over each half year if you adopt the latter course of action?

  Sources of finance for expansion into new foreign markets

A quoted company is considering several long-term sources of finance for expansion into new foreign markets.

  Long term financial planning

This assignment is designed for analyze Long term financial planning begins with the sales forecast and the key input in the long term fincial planning.

  Explain the role of fincial manager

This assignment explain the role of fincial manager, function of manger. And what are the motives of financial manager.

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