Question
In: Finance
Toyota is considering an installment of a new machines to be used over the next four...
Toyota is considering an installment of a new machines to be used over the next four years. The company can either buy the machine for $650,000 today or lease it. The lease term would be four years and would require annual lease payments of $ 50,000, with lease payments made at the
beginning of each 12 - month period. Toyota would exercise an option to purchase the asset for $850,000 at the termination of the lease. If the discount rate is 15% and the tax rate is 40%, would you advise Toyota to buy or to lease the machine?
Solutions
jeff jeffy answered 2 years agoRelated Solutions
Business Question Will Toyota be able to sustain its competitive advantage over the next decade? Please...
Business Question
Will Toyota be able to sustain its competitive advantage over the
next decade? Please explain why you believe so/why they would or
would not ve able to sustain. Incluce any references that you
used.
A company is considering replacing one of the old machines used in the manufacturing process. The...
A company is considering replacing one of the old machines used
in the manufacturing process. The machine was purchased 2 years ago
for $500,000. This machine is being depreciated on a straight-line
basis, and it has 4 yrs of remaining life. When this machine was
purchased 2 yrs ago, it was to have zero salvage value at the end
of 6 yrs. Currently , this machine has a market value of $250,000.
The company intends to keep this old machine...
A company is considering replacing one of the old machines used in the manufacturing process. The...
A company is considering replacing one of the old machines used
in the manufacturing process. The machine was purchased 2 years ago
for $600,000. This machine is being depreciated on a straight-line
basis, and it has 4 years of remaining life. When this machine was
purchased 2 years ago, it was assumed to have zero salvage value at
the end of its useful life of 6 years. Currently, this machine has
a market value of $250,000. The company intends to...
"Your company needs a machine for the next 20 years. You are considering two different machines....
"Your company needs a machine for the next 20 years. You are
considering two different machines.
Machine A
Installation cost ($): 2,500,000
Annual O&M costs ($): 77,000
Service life (years): 20
Salvage value ($): 79,000
Annual income taxes ($): 65,000
Machine B
Installation cost ($): 1,250,000
Annual O&M costs ($): 107,000
Service life (years): 10
Salvage value ($): 46,000
Annual income taxes ($): 45,000
If your company s MARR is 14%, determine which machine you should
buy. Assume that machine...
A firm is considering the purchase of one of two new machines. The data on each...
A firm is considering the purchase of one of two
new machines. The data on each are given.
Machine A Machine B
Initial cost 3400 6500
Service life 3 years 6 years
Salvage value 100 500
Net operating cost 2000/year 1800/year
If the MARR is 12%, which alternative should be
selected when using the following methods?
a. Annual equivalent cost approach ( method 2)
b. Present Worth comparison (method 2)
c. Incremental IRR comparison ( method 2)
A firm is considering the purchase of one of two new machines. The data on each...
A firm
is considering the purchase of one of two
new
machines. The data on each are given.
Machine A Machine B
Initial cost 3400 6500
Service life 3 years 6 years
Salvage value 100 500
Net
operating cost 2000/year 1800/year
If the
MARR is 12%, which alternative should be
selected when using the following methods?
a.
Annual equivalent cost approach ( method 2)
b.
Present Worth comparison (method 2)
c.
Incremental IRR comparison ( method 2)
Read Book Company is the manufacturer of of exercise machines and is considering producing a new...
Read Book Company is the manufacturer of of exercise machines
and is considering producing a new line of equipment in an effort
to increase its market share. The new production line will cost
$850,000 for manufacturing the parts and an additional $280,000is
needed for installation. The equipment falls into the MACRS 3-yr
class, and would be sold after four years for $350,000. The
equipment line will generate additional annual revenues of
$600,000, and will have additional annual operating expenses of...
Read Book Company is the manufacturer of of exercise machines and is considering producing a new...
Read Book Company is the manufacturer of of exercise machines
and is considering producing a new line of equipment in an effort
to increase its market share. The new production line will cost
$850,000 for manufacturing the parts and an additional $280,000is
needed for installation. The equipment falls into the MACRS 3-yr
class, and would be sold after four years for $350,000. The
equipment line will generate additional annual revenues of
$600,000, and will have additional annual operating expenses of...
Enter in excel formula You are considering the purchase of one of two machines used in...
Enter in excel formula
You are considering the purchase of one of two machines used in
your manufacturing plant. Machine A has a life of two years, costs
$95 initially, and then $140 per year in maintenance costs. Machine
B costs $165 initially, has a life of three years, and requires
$115 in annual maintenance costs. Either machine must be replaced
at the end of its life with an equivalent machine. The discount
rate is 12 percent and the tax...
Toyota is considering installing a new production line which is forecasted to start earning $5 million...
Toyota is considering installing a new production line which is
forecasted to start earning $5 million of revenue in the second
year of operation. Revenue is projected to decrease at 10% p.a.,
operating costs are 25% of annual revenue and the production line
is kept till the end of year 4, after which it is sold for $2
million. Setting up the production line requires $2 million today
and $4 million in the first year. 40% Toyota capital is financed...
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