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Question - The ABC Company is trying to decide whether to lease or buy a new computer-assisted drilling system for its oil exploration business. Management has decided that it must use the system to stay competitive; it will provide $700,000 in annual pre-tax cost savings. The system costs $6 million and will be depreciated straight-line to zero over five years. ABC's tax rate is 34 per cent, and the firm can borrow at 9 per cent. Lambert Leasing Company has offered to lease the drilling equipment to ABC for payments of $1,400,000 per year. Lambert's policy is to require its lessees to make payments at the start of the year.
Required - Suppose it is estimated that the equipment will have an after tax residual value of $500,000 at the end of the lease. What is the maximum lease payment acceptable to ABC now?
Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest. How much control does the Fed have over this longer real rate?
Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.
Accounting problems, Draw a detailed timeline incorporating the dividends, calculate the exact Payback Period b) the discounted Payback Period. the IRR, the NPV, the Profitability Index.
Term Structure of Interest Rates
Write a report on Internal Controls
Prepare the bank reconciliation for company.
Create a cost-benefit analysis to evaluate the project
Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR
Distinguish between liquidity and profitability.
Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.
Simple Interest, Compound interest, discount rate, force of interest, AV, PV
CAPM and Venture Capital
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