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