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You have decided you need a truck in your business. You are looking at a Ford Ranger. You have got some quotes for both leasing and purchasing a vehicle from Broadway Ford. The information is given below. Your after tax cost of capital is 7%. The tax rate is 30%. A pickup is considered a 5 year property. What are the NPV’s for the two alternatives? Which would you choose and why?
Purchase Cost: $24,490 with tax and title
Down: 0% Finance rate: 6.99 % per year
Payments: 3 Salvage value: $9,660
Lease Lease payments $4,319 per year for 3 years.
Accounts receivable changes without bad debts Tara’s Textiles currently has credit sales of $357 million per year and an average collection period of 58 days. Calculate the additional profit contribution from sales that the firm will realize if it ma..
The corporate tax rate is 30%. What would be the approximate after-tax cost of debt for a new issue of bonds.
Stocks A and B have the following data. Assuming the stock market is efficient and the stocks are in equilibrium, These two stocks should have the same expected return. These two stocks should have the same price. These two stocks must have the same ..
Investors require a return on Company XYZ’s stock of approximately 10% per year. The company has 10 million shares outstanding with a price of $20/share. Company XYX has outstanding debt with a market value $80 million and a yield to maturity of 6%. ..
Compact fluorescent lamps (CFLs) have become more popular in recent years, but do they make financial sense? Suppose a typical 60-watt incandescent light bulb costs $0.47 and lasts for 1,000 hours. A 15-watt CFL, which provides the same light, costs ..
If the stock currently sells for $55 per share, what is the required return?
What will your monthly payments be? What is the effective annual rate on this loan?
How many shares will you receive when you invest $10,000? What is the load charge, in dollars, for this transaction?
what portion of the capital budget will be funded with debt?
Calculate the cost of each capital component, after-tax cost of debt, cost of preferred, and cost of equity with the DCF method and CAPM method.
The finance charges for a loan may include
Present Value and Multiple Cash Flows What is the present value of $7,500 per year, at a discount rate of 7.1 percent, if the first payment is received 6 years from now and the last payment is received 25 years from now?
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