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Kohers Inc. is considering a leasing arrangement to finance some manufacturing tools that it needs for the next 3 years. The tools will be obsolete and worthless after 3 years. The firm will depreciate the cost of the tools on a straight-line basis over their 3-year life. It can borrow $4,800,000, the purchase price, at 10% and buy the tools, or it can make 3 equal end-of-year lease payments of $2,100,000 each and lease them. The loan obtained from the bank is a 3-year simple interest loan, with interest-only paid at the end of the year. The loan principal would be repaid in year 3. The firm's tax rate is 40%. Annual maintenance costs associated with ownership would start immediately and are estimated at $240,000, but this cost would be borne by the lessor if it leases. What is the net advantage to leasing (NAL), in thousands? (Suggestion: Delete 3 zeros from dollars and work in thousands.) Assume that the capital structure is 100% debt when calculating WACC.
Northwest Electric Company's (NEC) capital structure comprises of debt and common equity only in the proportion of 0.40 and 0.60 respectively. Cost of debt of N
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Calculate your portfolio's new beta.
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Explain the advantages of using the XIRR function rather than the IRR function for calculating a bond's yield to maturity.
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harmony company has current sales of 940000. it has excess capacity in its assets in the amount of 22. how much can
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What is the price today (in dollars and cents) of a 15-year zero coupon bond if the required rate of return is 8.99%. The bond face value is $1000.
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