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?
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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...
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...
CCC Conglomerates is analyzing two machines to determine which one it should purchase. Whichever machine is...
CCC Conglomerates is analyzing two machines to determine which one it should purchase. Whichever machine is purchased will be replaced at the end of its useful life. The company requires a 12 percent rate of return and uses straight-line depreciation to a zero book value over the life of the machine. Machine A has a cost of $378,000, annual operating costs of $22,000, and a 3-year life. Machine B costs $257,000, has annual operating costs of $43,000, and a 2-year...
Fleda's Beauty Company has $200,000 of total assets and earns 20 percent interest and taxes on...
Fleda's Beauty Company has $200,000 of total assets and earns 20 percent interest and taxes on these assets. The ratio of total debts to total assets (or DR been set at 50 percent. The interest rate on short-term debt is 7 percent, while the interest rate on long-term debt is 10 percent. A conservative policy calls for only long-term debt with no short-term debt; an intermediate policy calls for 50 percent short-term debt and 50 percent long-term debt; and an...
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...
Fleda's Beauty Company has $200,000 of total assets and earns 20 percent interest and taxes on these assets. The ratio of total debts to total assets (or DR been set at 50 percent. The interest rate on short-term debt is 7 percent, while the interest rate on long-term debt is 10 percent. A conservative policy calls for only long-term debt with no short-term debt; an intermediate policy calls for 50 percent short-term debt and 50 percent long-term debt; and an...
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