What is the correct answer to comey question

Assignment Help Finance Basics
Reference no: EM132661944

Comey Products has decided to acquire some new equipment having a $240,000 purchase price. The equipment will last 4 years and is in the MACRS 3-year class. (The depreciation rates for Year 1 through Year 4 are equal to 0.3333, 0.4445, 0.1481, and 0.0741.) The firm can borrow at a 9% rate and pays a 25% federal-plus-state tax rate. Comey is considering leasing the property but wishes to know the cost of borrowing that it should use when comparing purchasing to leasing and has hired you to answer this question. What is the correct answer to Comey's question? (Hint: Use the shortcut method to find the after-tax cost of the loan payments.) Do not round intermediate calculations. Round your answer to the nearest dollar.

Reference no: EM132661944

Questions Cloud

Find the annualized interest cost : In this question you will have to compute the effective annual cost of trade credit. Suppose a firm is offered the following the terms are 1.3/9 net 30.
What are the tax issues for Barry and Pheasant : Pheasant Corporation redeemed all of Barry's shares in the corporation with a property distribution. What are the tax issues for Barry and Pheasant
How can you use strategy to communicate to stakeholders : Simon Sinek is an inspirational leader and discusses communication strategies. After reviewing the video, how can you use this strategy to communicate.
Consideration when collecting data for strategic decision : What factors should be taken into consideration when collecting data for a strategic decision?
What is the correct answer to comey question : What is the correct answer to Comey's question? (Hint: Use the shortcut method to find the after-tax cost of the loan payments.)
What should the opening inventory in units be for april : Noel Enterprises, What is the total number of units to be produced in February? What should the opening inventory in units be for April?
What is crocs core competency : Think of Crocs in terms of competencies - not products, not retail locations, not partnerships.
Determining whether Chao should sell her stock : What issues should be considered in determining whether Chao should sell her stock to one of the other shareholders, to Cerise Corporation
Identify a professional practice use of the theories : Architect Daniel Libeskind is credited with saying "To provide meaningful architecture is not to parody history, but to articulate it." The suggestion is that.

Reviews

Write a Review

Finance Basics Questions & Answers

  Place of leadership skills

Example in ones personal or professional life where management skills were used in the place of leadership skills.

  Contrast of profit and shareholder wealth maximization

When those Sets proved wrong, the $1.24 billon losses resulted in the 1995 demise of the centuries-old Barings Bank More than any other single episode in world financial history Lesson's misdeed provide the importance of character in the financial in..

  Calculate residual earnings that are forecast for each year

Residual Earnings Valuation and Target Prices (Medium) The following forecasts of earnings per share (E PS) and dividend per share (DPS) were made at the end.

  How bond prices may be affected by money supply growth

Bond Price Sensitivity: - Explain how bond prices may be affected by money supply growth, oil prices, and economic growth.

  Harte systems inc a maker of electronic surveillance

present value of a mixed stream harte systems inc. a maker of electronic surveillance equipment is considering selling

  Calculate the financial ratios for phone corporation

Calculate the following financial ratios for Phone Corporation: (Use 365 days in a year. Do not round intermediate calculations. Round your final answers to 2 d

  What are the terminal year cash flows

You expect 100 diners per night. The restaurant will be open for 300 nights per year. The average diner orders food with a menu price of $35 and beverages.

  What is the operating cash flow

Chevelle, Inc., has sales of $41,500, costs of $19,600, depreciation expense of $1,800, and interest expense of $1,000. If the tax rate is 35 percent, what is the operating cash flow, or OCF?

  Learn more about government issued t-bills and munis

Learn more about government issued T-bills and munis. Would you invest in government issued T-bills? Why or why not? Are there specific munis you would or would not invest in?

  Discuss who should be involved in decisions

In public high schools in the US, discuss who should be involved in decisions regarding financial resource allocation. Why?

  Explain the determinants of consumption

Explain the determinants of consumption (current after-tax income, wealth, debt, and present value of expected income). Why do they matter

  What yield to maturity will an investor receive

What yield to maturity will an investor receive if they purchase today?

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