The company would like to buy a machine for 25 mil. USD. Machine would be depreciated...
The company would like to buy a machine for 25 mil. USD. Machine would be depreciated for 3 years using 3-years MACRS method. Company has following options:
Loan: maturity 3 years, monthly payment, interest 6 % p.a., equal annuity payment
Leasing: leasing coefficient 1.25; advanced payment 30 %; maturity 3 years; monthly payment
Corporate tax rate is 19 %.
Which type of financing is better for us?
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The company would like to buy a machine for 25 mil. USD. Machine
would be depreciated...
The company would like to buy a machine for 25 mil. USD. Machine would be depreciated for 3 years using 3-years MACRS method. Company has following options: Loan: maturity 3 years, monthly payment, in...
The company would like to buy a machine for 25 mil. USD. Machine would be depreciated for 3 years using 3-years MACRS method. Company has following options: Loan: maturity 3 years, monthly payment, interest 6 % p.a., equal annuity payment Leasing: leasing coefficient 1.25; advanced payment 30 %; maturity 3 years; monthly payment Corporate tax rate is 19 %. Which type of financing is better for us?
1. Your company plans to buy a new machine with a cost of $80,000. It is...
1. Your company plans to buy a new machine with a cost of $80,000. It is expected to operate for 12 years, with no salvage value at the end of that time. You have estimated that the purchase of this machine will enhance your company's net before-tax cash flow by $20,000 per year. The tax rate is 40%, and the company's after-tax minimum acceptable rate of return is 10% There are two financing options for the machine. The first would...
Lease or Buy Wolfson Corporation has decided to purchase a new machine that costs $4.2 million....
Lease or Buy Wolfson Corporation has decided to purchase a new machine that costs $4.2 million. The machine will be depreciated on a straight-line basis and will be worthless after four years. The corporate tax rate is 35 percent. The Sur Bank has offered Wolfson a four-year loan for $4.2 million. The repayment schedule is four yearly principal repayments of $1.05.million and an interest charge of 9 percent on the outstanding balance of the loan at the beginning of each...
Please, help with this exercise. Thanks in advance. Corporate Finance A2 1. The joint stock company has a total capital of 300 mil. USD. The company has the following structure of capital: a) 20...
Please, help with this exercise.
Thanks in advance.
Corporate Finance A2 1. The joint stock company has a total capital of 300 mil. USD. The company has the following structure of capital: a) 200 mil. USD of shares where 180 mil. USD are in common stock and remaining part belongs to preferred stock b) Long-term loans is 60 mil. USD with 3 % pa c) Short-term loans is 40 mil. USD with 10 % pa Determine the weighted average of...
Carmichael Cleaners needs a new steam finishing machine that costs $100,000. The company is evaluating whether...
Carmichael Cleaners needs a new steam finishing machine that costs $100,000. The company is evaluating whether it should lease or purchase the machine. The equipment falls into the MACRS 3-year class, and it would be used for 3 years and then sold, because the firm plans to move to a new facility at that time. The estimated value of the equipment after 3 years is $30,000. A maintenance contract on the equipment would cost $3,000 per year, payable at the...
Additional Information for All Question: Return on market is 10%, retun on T-bills is 4% and...
Additional Information for All Question: Return on market is 10%, retun on T-bills is 4% and companies pay 40% corporate tax and 30% capital gains tax.. Aston Inc is a company that has a cost of capital of 16%. It is considering either leasing or purchasing a new machine for a project that still has 3 years of useful economic life left Aston Inc is currently using an old machine that is fully depreciated and amortized After accounting for revenue...
Additional Information for All Question: Return on market is 10%, return on T-bills is 4%, and...
Additional Information for All Question: Return on market is 10%, return on T-bills is 4%, and companies pay 40% corporate tax and 30% capital gains tax. Aston Inc. is a company that has a cost of capital of 16%. It is considering either leasing or purchasing a new machine for a project that still has 3 years of useful economic life left. Aston Inc. is currently using an old machine that is fully depreciated and amortized After accounting for revenue...
Additional Information for All Question: Return on market is 10%, return on T-bills is 4%, and...
Additional Information for All Question: Return on market is 10%, return on T-bills is 4%, and companies pay 40% corporate tax and 30% capital gains tax. Aston Inc. is a company that has a cost of capital of 16%. It is considering either leasing or purchasing a new machine for a project that still has 3 years of useful economic life left. Aston Inc. is currently using an old machine that is fully depreciated and amortized After accounting for revenue...
The Sweetwater Candy Company would like to buy a new machine that would automatically “dip” chocolates....
The Sweetwater Candy Company would like to buy a new machine that would automatically “dip” chocolates. The dipping operation is currently done largely by hand. The machine the company is considering costs $160,000. The manufacturer estimates that the machine would be usable for five years but would require the replacement of several key parts at the end of the third year. These parts would cost $10,800, including installation. After five years, the machine could be sold for $5,000. The company...
The Sweetwater Candy Company would like to buy a new machine that would automatically “dip” chocolates....
The Sweetwater Candy Company would like to buy a new machine that would automatically “dip” chocolates. The dipping operation currently is done largely by hand. The machine the company is considering costs $200,000. The manufacturer estimates that the machine would be usable for five years but would require the replacement of several key parts at the end of the third year. These parts would cost $10,100, including installation. After five years, the machine could be sold for $9,000. The company...
1. Your company plans to buy a new machine with a cost of $80,000. It is expected to operate for 12 years, with no salvage value at the end of that time. You have estimated that the purchase of this machine will enhance your company's net before-tax cash flow by $20,000 per year. The tax rate is 40%, and the company's after-tax minimum acceptable rate of return is 10% There are two financing options for the machine. The first would...
Lease or Buy Wolfson Corporation has decided to purchase a new machine that costs $4.2 million. The machine will be depreciated on a straight-line basis and will be worthless after four years. The corporate tax rate is 35 percent. The Sur Bank has offered Wolfson a four-year loan for $4.2 million. The repayment schedule is four yearly principal repayments of $1.05.million and an interest charge of 9 percent on the outstanding balance of the loan at the beginning of each...
Please, help with this exercise.
Thanks in advance.
Corporate Finance A2 1. The joint stock company has a total capital of 300 mil. USD. The company has the following structure of capital: a) 200 mil. USD of shares where 180 mil. USD are in common stock and remaining part belongs to preferred stock b) Long-term loans is 60 mil. USD with 3 % pa c) Short-term loans is 40 mil. USD with 10 % pa Determine the weighted average of...
Additional Information for All Question: Return on market is 10%, retun on T-bills is 4% and companies pay 40% corporate tax and 30% capital gains tax.. Aston Inc is a company that has a cost of capital of 16%. It is considering either leasing or purchasing a new machine for a project that still has 3 years of useful economic life left Aston Inc is currently using an old machine that is fully depreciated and amortized After accounting for revenue...
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