Calculate the cash flows for each alternative, Cost Accounting

Assignment Help:

A company is evaluating the following lease or buy option.

A four year lease with annual payments of $25,000 payable at the beginning of the year.The tax shield is available at the end of the year.  The company's tax rate is 25% and company's cost of capital is 12%.  


The machine costs $85,000 has a four year useful life with no residual value.If financed the asset would be financed through a term loan at 10%.  The loan calls for equal payments to be made at the end of each year for four years.The machine would qualify for accelerated capital cost allowance written off on a straight line basis over two years.

Calculate the cash flows for each alternative.  Which alternative is the most attractive?


Related Discussions:- Calculate the cash flows for each alternative

Cost sheet, Marple Associates is a consulting firm that specializes in info...

Marple Associates is a consulting firm that specializes in information systems for construction and landscaping companies. The firm has two offices-one in Houston and one in Dallas

Measuring performance in organization, list and discus the problem encounte...

list and discus the problem encountered in adopting profit as a yardstick in measuring performance

Importance of cost classification, Importance of Cost Classification A...

Importance of Cost Classification Analysis of cost behaviour is significant to all organizations for effective management. It is since many organizations have a unique cost st

Evaluate the overhead allocation rate, Vintage Auto Company manufactures pa...

Vintage Auto Company manufactures parts to order for antique cars. Vintage Auto makes everything from fenders to engine blocks. Each customer order is treated as a job. Vintage Aut

Cost Classification, What are the importance of cost classification

What are the importance of cost classification

Working capital, We have earlier explained working capital by total current...

We have earlier explained working capital by total current assets less current liabilities. It, in other words, implies that all the assets held through the business along with the

Cost audit, what is cost audit? types of cost audit explain

what is cost audit? types of cost audit explain

Fcff and fcfe, Show the effect of an increase in each of the items listed b...

Show the effect of an increase in each of the items listed below on the FCFF and FCFE. Suppose a $100 increase in every case and a 40 percent tax rate a.    Net income b.    Cas

What are the variable costs, Normal 0 false false false ...

Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInternetExplorer4 Variable costs are those

Cost units - terms used in cost accounting, Cost Units - Terms Used in Cost...

Cost Units - Terms Used in Cost Accounting It is the quantitative units of the service or product in relation to those costs are ascertained. The cost unit will be determined

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd