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Delamont Transport Company (DTC) is evaluating the merits of leasing versus purchasing 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, so the interest expense for taxes would decline over time. 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, it would purchase a maintenance contract that costs $1,000 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. DTC's tax rate is 25%. What is the net advantage to leasing? (Note: Assume MACRS rates for Years 1 to 4 are 0.3333, 0.4445, 0.15, and 0.07.)
Fresno Corp. is a fast-growing company that expects to grow at a rate of 21 percent over the next two years and then to slow to a growth rate of 16 percent for the following three years. If the last dividend paid by the company was $2.15.
What is the difference between a call option and a put option? What are the differences between exchange-traded and OTC currency options?
ACCT19062 Issues in Financial Reporting. Explain the terms 'fair value less costs of disposal' and 'value in use'. Prepare appropriate journal entries for Black Cabs Pty Ltd to record the events on 30 June 2015 and 30 June 2016
Identify a brand in your cabinet or pantry. Do you believe this brand will have a finite lifespan or one that lasts forever? Support your reasoning
Why do you think closed-end country funds often trade at a premium or discount?
ABC Co. has a current dividend of $1.80. Dividends are expected to grow at a rate of 7% a year into the foreseeable future. What is ABC's cost of external equity if its shares can be sold to net $46 a share?
The bond, which was issued 22 years ago, matures in eight years. If investors require a return equal to 4 percent to invest in similar bonds, what is the market value of FFL's bond?
You have come up with the following data concerning ‘Zion' Company. The company has 2,500,000 shares.
Company ABCD is considering purchasing a new machine to replace an old one. The old machine has a zero book value and zero scrappage value.
Breakeven analysis Anke Perks is opening an arts and crafts store that focuses on canvases, paints, and pencils. The selling price of a canvas is $24.
Security F has an expected return of 12% and a standard deviation of 9% per year. Security G has an expected return of 18% and a standard deviation of 25% per year.
Some friends tell you that they paid $32, 544 down on a new house and are to pay $632 per month for 30 years. If interest is 6.3% compounded monthly.
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