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Bavarian Brew wants to lease a new bottling machine. The company obtains a 10-year lease requiring annual payments of $15 000 at the beginning of the year. The company is expected to exercise its option to purchase the machine at the termination of the lease for $10 000 at the end of year 10. The company is in the 35% tax bracket.
a. What is the annual after-tax cash flow for Bavarian Brew from the lease?
b. Bavarian Brew has the option to purchase the machine. If the present value of the cash flows associated with the purchase is $78 000, what is the net present value of the lease option? Assume that the company's cost of debt is 7%
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The computers Pty Ltd has no chance under the court of law to accuse the former manager for soliciting funds from the customers, if the manager does not use the name of the company that is the Pty Ltd for soliciting customers then the customers shoul..
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scheuer enterprises has a beta of 1.10 the real risk-free rate is 2.00 investors expect a 3.00 future inflation rate
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Acme Tool is an all-equity firm (i.e. it has no debt financing) with abeta of 1.25.If the risk-free rate is 4.5% and the market risk premiumis 9% (the expected return in the market is 13.5%), what is the cost of equity capital for Acme Tool.
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