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Carolina Trucking Company (CTC) 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 9%, 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 $12,000. If CTC buys the truck, it would purchase a maintenance contract that costs $1,500 per year, payable at the end of each year. The lease terms, which include maintenance, call for a $10,000 lease payment (4 payments total) at the beginning of each year. CTC's tax rate is 35%. What is the net advantage to leasing? (Note: MACRS rates for Years 1 to 4 are 0.33, 0.45, 0.15, and 0.07.)
Stanley Hart invested in a municipal bond that promised an annual yield of 6.7%. The bond pays coupons twice a year.
Computation of expected return using CAPM approach and Required rate of return-Assume that the risk-free rate is 6 percent
Storico Cleaning, Corporation, had additions to retained earnings for the year just ended of $510,000. The company paid out $130,000 in cash dividends, and it has ending total equity of $6.8 million.
Assume Timex has nonmaturing preferred stock outstanding that pays a $1.00 quarterly dividend and has a required return of 8 percent APR.
What is the basis for deciding whether to use the spot rate or some other exchange rate when converting a foreign subsidiary's trial balance accounts into U.S. dollars under the temporal method?
The Hassan Corporation has an Electric Mixer Division and an Electric Lamp Division. What amount of interest costs should be allocated to Electric Lamp Division?
Objective type questions on bond valuation and WACC and project evaluation and find the relative risk of a proposed project is best accounted for by
Calculating multiple cash flows for a year and the amount of the annuity shown below is the amount of each individual cash flow
Nast Store has derived the following customer credit scoring model after years of information collecting and model testing:
Effective yearly rate A financial institution made a $10,000, 1-year discount loan at 10 percent interest, requiring a compensating balance equal to 20 percent of the face value of the loan.
Mustard Patch Doll Company needs to purchase new plastic moulding machines to meet the demand for its product. The cost of the equipment is $100,000. It is estimated that the firm will generate, after tax, operating cash flow (OCF) of $22,000 per yea..
Computation of the value of the annuity payment and would you have to deposit each year if your first deposit is made now and the final deposit is made one year
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