Reference no: EM133077714
Question - Assume that Kaibab Logging Company's tax rate is 40%. A logging machine it needs costs $200 to buy. This logging equipment lasts for two years and is depreciated at $100 per year. For simplicity, assume away other factors such as maintenance costs, salvage value, etc. Kaibab Logging faces the following options:
For Blank 1
If the Kaibab Logging leases this asset for 2 years, the payment is $120 at the beginning of each year.
If the Kaibab Logging borrows a loan and buys the asset, the bank charges 10% interest on the loan. Kaibab Logging Company can also use its internal funds to buy the equipment.
Remarks: if your answer is "(B) $100", then please type in "B". Do not type in $100, or 100, or (B), or (B) $100, ... Just type in the letter otherwise BbLearn will not recognize your answer.
1. What's Kaibab Logging Company's cost of leasing? (find the dollar amount)
(A)-$139.92
(B)-$132.00
(C)-$128.78
(D) None of the rest is correct
2. What's Kaibab Logging Company's cost of owning? (find the dollar amount)
(A)-$132.00
(B)-$145.76
(C)-$126.66
(D) None of the rest is correct
3. What's Kaibab Logging Company's NAL?
(A)-S15.54
(B)-$26.23
(C) $9.07
(D)-$13.26
(E) None of the rest is correct