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Dakota Trucking Company (DTC) is evaluating a potential lease for a truck with a 4-year life that costs $40,000 and falls into the MACRS 3-year class. If the firm borrows and buys the truck, the loan rate would be 10%, and the loan would be amortized over the truck's 4-year life. The loan payments would be made at the end of each year. The truck will be used for 4 years, at the end of which time it will be sold at an estimated residual value of $10,000. If DTC buys the truck, its after tax cash flows would be the following: (Year 1) - 6,339; (Year 2) -4,764; (Year 3)-9,943; (Year 4) -5,640; all occurring at the end of respective years. The lease terms, call for a $10,000 lease payment (4 payments total) at the beginning of each year. DTC's tax rate is 40%. Should the firm lease or buy?
What is the Net Advantage of Leasing (if any)?
Release of the balance sheet for the after the note issue and interest payments.
Exxon Mobil has a 34 percent tax rate and has decided to issue $100 million of seven-year debt. It has three alternatives. A U.S. public offering would need an 8 percent coupon with interest payable semiannually and $900,000 of flotation expense.
A Japanese company has a bond outstanding that sells for 96 percent of its ¥100,000 par value. The bond has a coupon rate of 6.30 percent paid annually and matures in 19 years.
A share of stock currently pays a dividend of $5. The dividend is expected to grow at a 20% yearly for next ten years, then it will grow at a 15% rate for 10 more years
Set up the fund of semi-annual payments to be compounded semi-annually to accumulate the some of $100,000 after 10 years at 8 percent annual rate (20 payments). Find out how much the semi-annual payment should be. (round to whole numbers.)
Wilkins Food Products, Corporation acquired a packaging equipment from Lawrence Specialists Corporation. Lawrence completed construction of the equipment on January 1, 2004.
You have observed given returns on ABC's stocks over last 5 years: 3.8%, 9.9%, 10.1%, 11.9%, 3.2% determine geometric average returns on stock over this 5-year period.
Determine the meaning of the following sentence: Amortization affects the amount of interest expense and explain how does amortization of premium affect the amount of interest expense?
Over the last 5-years, the Phoenix Fund has averaged a monthly return of .013, while money market instruments have yielded .006. During the same period
A company is considering building a new and improved production facility for one of its existing products. Should the company build the new and improved production facility.
Dividends and retained earnings. Suppose the firm in problem 2 paid out $56,000 in cash dividends. What is the addition to retained earnings?
Participant in a stock bonus plan
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