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Optex Limited has decided to go for an equipment costing Rs. 60 million. Optex is considering two alternatives: (i) leasing the equipment, and (ii) borrowing and purchasing the equipment. GT capital is willing to lease the equipment to Optex for an annual lease rental of Rs.16 million for 5 years, the lease rental being payable in arrears. There is a management fee of Rs.1 million payable on signing the lease contract. The tax relevant depreciation rate on the equipment is 25 percent as per the WDV method. The net salvage value of the equipment after five years is expected to be Rs.14 million. Optex has an effective tax rate of 30 percent and its post- tax cost of debt is 7 percent. What is the net advantage of leasing (NAL) for Optex?
What is the discounted payback period if the discount rate is zero percent?
A Japanese yen is worth $0.0050, and a Fijian dollar (F$) is worth $0.5190. What is the value of the yen in Fijian dollars (i.e., how many Fijian dollars do you need to buy a yen)?
What is the bond’s nominal yield to maturity? What is its nominal yield to call?
Suppose your firm has decided to build a 10-story office building. Find three leasing companies that provide such real estate leasing.
On January 2, 2014, Jensen Company borrowed $102,000 from Lyon Country Bank. The terms of the loan agreement specified 4 equal annual payments at 6% annual interest. Compute the amount of each of these payments, assuming, they begin on December 31, 2..
A finance manager from TLC is trying to prepare a cash flow forecast for the years 2014–2016.
Calculate the Pay Back Period (PBP) of each project, assess its acceptability, and indicate which project is best using NPV. Calculate the Internal Rate of Return (IRR) of each project, assess its acceptability.
A company issues a 10 percent coupon bond with 17 years maturity and $1,000 face (par) value. find the bond's price.
Calculate the cost of not taking a cash discount. What is the effective rate of interest on the bank loan?
Georgia, the vice president of finance of Advanced Instruments, was eager to talk to his investment banker about future financing for the firm.
Which of the following transactions would produce income according to the Haig-Simons definition that would not legally be taxed under IRS rules? a. Receiving a cash payment for painting a client’s house. b. Receiving a 1971 Ford Thunderbird as payme..
The stock will pay a dividend at year-end of $2. What price will you be willing to pay for the stock?
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