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Your landscaping company can lease a truck for $7,200 a year (paid at year-end) for 6 years. It can instead buy the truck for $35,000. The truck will be valueless after 6 years. The interest rate your company can earn on its funds is 7%.
a. What is the cost of leasing? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Present value of lease $
b. Is it cheaper to buy or lease?
Buy Lease c-1. What if the lease payments are an annuity due, so the first payment comes immediately? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Present value of lease $
c-2. Is it cheaper to buy or lease? Buy.
A company is trying to establish its optimal capital structure. Its current capital structure consists of 66.42 percent debt and 100-66.42 percent equity; however, the CEO believes that the firm should use more debt. What would be the firm’s estimate..
Fairfax Paint just borrowed 66,800 dollars. The terms of the loan require the company to make equal semi-annual payments forever. The first semi-annual payment is due in 6 months. If the regular semi-annual loan payment is 4,800 dollars, then what is..
What kinds of costs are associated with shifting to ESG strategies?
You have the opportunity to purchase an investment that will generate annual cash flows of $11,982 per year for the next 28 years. If your required rate of return on this investment is 23.45%, how much is the investment worth?
Free Cash Inc.’s cost of capital is estimated to be 9 percent. Free cash flows beyond year 3 are estimated to grow at an annual rate of 4 percent.
Apps R Us made a purchase of $20,000 worth of computer equipment. The equipment is expected to have a useful life of three years, and be worth $2,000 at the end of its useful life. What will the monthly depreciation be for the equipment? When they pu..
Suppose a businessman has an idea to build an electric motor cycle. Using the capital budgeting method, is this project financially worthwhile?
Suppose you purchase 1,050 shares of stock at $76 per share with an initial cash investment of $30,000. The call money rate is 5 percent and you are charged a 1.5 percent premium over this rate. Calculate your return on investment one year later if t..
Calculate the amount of money that will accumulate if Leslie leaves the money in the bank for 2, 6 and 16 year(s).
Beta Industries has net income of $3,900,000, and it has 1,235,000 shares of common stock outstanding. The company's stock currently trades at $45 a share. Beta is considering a plan in which it will use available cash to repurchase 15% of its shares..
Project A has a net present value (NPV) of $1.6 million and an internal rate of return (IRR) of 16%. Which project should the firm choose?
The 2011 balance sheet of Anna's Tennis Shop, Inc., showed long-term debt of $6.4 million,-What was the firm's 2012 operating cash flow, or OCF?
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