Question

In: Finance

You own a fleet of food trucks. You are thinking about borrowing $2,045,039 for 10 years...

You own a fleet of food trucks. You are thinking about borrowing $2,045,039 for 10 years at 0.06 to upgrade the stove tops in your trucks. This upgrade has an unlevered NPV of 241,095. The terms of this loan require you to add GPS trackers to your trucks, which will cost you $22,949, and $5,793 per year for the next 10 years. Your tax rate is 0.34. You have little use for the GPS trackers, and would not have purchased them if the loan covenants did not require them. What is the NPV of this upgrade if you take take the loan?

Solutions

Expert Solution

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

You own a fleet of food trucks. You are thinking about borrowing $2,496,626 for 10 years...
You own a fleet of food trucks. You are thinking about borrowing $2,496,626 for 10 years at 0.06 to upgrade the stove tops in your trucks. This upgrade has an unlevered NPV of 302,555. The terms of this loan require you to add GPS trackers to your trucks, which will cost you $24,608, and $8,642 per year for the next 10 years. Your tax rate is 0.23. You have little use for the GPS trackers, and would not have purchased...
You own a fleet of food trucks. You are thinking about borrowing $2,118,992 for 10 years...
You own a fleet of food trucks. You are thinking about borrowing $2,118,992 for 10 years at 0.05 to upgrade the stove tops in your trucks. This upgrade has an unlevered NPV of 356,960. The terms of this loan require you to add GPS trackers to your trucks, which will cost you $27,539, and $6,408 per year for the next 10 years. Your tax rate is 0.31. You have little use for the GPS trackers, and would not have purchased...
You own a fleet of food trucks. You are thinking about borrowing $2,367,487 for 10 years...
You own a fleet of food trucks. You are thinking about borrowing $2,367,487 for 10 years at 0.07 to upgrade the stove tops in your trucks. This upgrade has an unlevered NPV of 342,464. The terms of this loan require you to add GPS trackers to your trucks, which will cost you $20,414, and $7,903 per year for the next 10 years. Your tax rate is 0.24. You have little use for the GPS trackers, and would not have purchased...
A firm that has zero debt and zero preferred stock is thinking about borrowing money. Their...
A firm that has zero debt and zero preferred stock is thinking about borrowing money. Their capital structure policy allows them a maximum of 40% debt. They currently have a beta of 0.85 and a 35% corporate tax rate. They would like to keep their beta at 1.15 or lower. Can they maximize debt at 40% while meeting their beta goal? Question 1 options: Yes, the levered beta is 1.22 at 40% debt. No, the levered beta is 1.22 at...
You will be graduating in two years and are thinking about your future. You know that...
You will be graduating in two years and are thinking about your future. You know that you will want to buy a house five years after you graduate and that you will want to put down $60,000. As of right now, you have $8,000 in your savings account. You are also fairly certain that once you gradu- ate, you can work in the family business and earn $32,000 a year, with a 5 percent raise every year. You plan to...
Thinking about your own life, are you engaged in a social capital institution? How does being...
Thinking about your own life, are you engaged in a social capital institution? How does being involved in that social capital institution make you more (or less) engaged in civic life? I just need a few points to write an essay on this topic.
Josh Hamilton is thinking about borrowing $15,000 from his bank. The bank could use add-on rates...
Josh Hamilton is thinking about borrowing $15,000 from his bank. The bank could use add-on rates of 4.5% for 3 years, 5% for 4 years, and 6% for 5 years. calculate the finance charge and monthly payment for these 3 options.
For the last 10 years you have been working in the health food business. You have...
For the last 10 years you have been working in the health food business. You have talked to many customers who have suggested a new restaurant concept. The restaurant would feature a variety of low calorie meals (under 500) made from healthy ingredients (organic fruits and vegetables and steroid/hormone free meat). The restaurant would include a bar with an extensive organic wine list and trendy décor. There would be an emphasis on high quality, friendly service, and colorful meal presentation....
For the last 10 years you have been working in the health food business. You have...
For the last 10 years you have been working in the health food business. You have talked to many customers who have suggested a new restaurant concept. The restaurant would feature a variety of low calorie meals (under 500) made from healthy ingredients (organic fruits and vegetables and steroid/hormone free meat). The restaurant would include a bar with an extensive organic wine list and trendy décor. There would be an emphasis on high quality, friendly service, and colorful meal presentation....
For the last 10 years you have been working in the health food business. You have...
For the last 10 years you have been working in the health food business. You have talked to many customers who have suggested a new restaurant concept. The restaurant would feature a variety of low calorie meals ( under 500) made from healthy ingredients ( e.g. organic fruits and vegetables and steroid/hormone free meat). The restaurant would include a bar with an extensive organic wine list and trendy décor. There would be an emphasis on high quality, friendly service, and...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT