Question
In: Finance
Exercise #4: A firm can lease a truck for 5 years at a cost of $45,000...
Exercise #4: A firm can lease a truck for 5 years at a cost of $45,000 annually. It can instead buy a truck at a cost of $95,000, with annual maintenance expenses of $25,000. The truck will be sold at the end of 5 years for $35,000. The cost of capital is 15%. Which is a better option? A. EAC of Lease = [11] B. PV of all Costs of Purchase = [12] C. EAC of Purchase = [13] D. Better Option is to …………[14]………………………….
Solutions
jeff jeffy answered 9 months agoRelated Solutions
A firm can lease a truck for 5 years at a cost of $45,000 annually. It...
A firm can lease a truck for 5 years at a cost of $45,000
annually. It can instead buy a truck at a cost of $95,000, with
annual maintenance expenses of $25,000. The truck will be sold at
the end of 5 years for $35,000. The cost of capital is 15%. What is
the EAC of Purchase?
A firm can lease a truck for 4 years at a cost of $36,000 annually. It...
A firm can lease a truck for 4 years at a cost of $36,000
annually. It can instead buy a truck at a cost of $86,000, with
annual maintenance expenses of $16,000. The truck will be sold at
the end of 4 years for $26,000.
a. What is the equivalent annual cost of buying
and maintaining the truck if the discount rate is 10%? (Do
not round intermediate calculations. Round your answer to 2 decimal
places.)
A firm can lease a truck for 4 years at a cost of $41,000 annually. It...
A firm can lease a truck for 4 years at a cost of $41,000
annually. It can instead buy a truck at a cost of $91,000, with
annual maintenance expenses of $21,000. The truck will be sold at
the end of 4 years for $31,000. a. Calculate present value if the
discount rate is 10%
A firm can lease a truck for 5 years at a cost of $42,000 annually. It...
A firm can lease a truck for 5 years at a cost of $42,000
annually. It can instead buy a truck at a cost of $92,000, with
annual maintenance expenses of $22,000. The truck will be sold at
the end of 5 years for $32,000.
a. What is the equivalent annual cost of buying
and maintaining the truck if the discount rate is 12%? (Do
not round intermediate calculations. Round your answer to 2 decimal
places.)
b. Which is the...
Deutsche Transport can lease a truck for four years at a cost of €30,000 annually. It...
Deutsche Transport can lease a truck for four years at a cost of
€30,000 annually. It can instead buy a truck at a cost of €80,000,
with annual maintenance expenses of €10,000. The truck will be sold
at the end of four years for €20,000. Ignore taxes.
a. What is the equivalent annual cost of buying
and maintaining the truck if the discount rate is 10%? (Do
not round intermediate calculations. Enter your answer in Euro.
Round your answer to...
Your landscaping company can lease a truck for $7,200 a year for 6 years. It can...
Your landscaping company can lease a truck for $7,200 a year for
6 years. It can instead buy the truck for $35,000. The truck will
be valueless after 6 years. a. What is the present value of the
lease payments, if the opportunity cost of capital is 7%. (Do not
round intermediate calculations. Round your answer to 2 decimal
places.) Present value $ b. Is it cheaper to buy or lease? Lease
Buy
An asset has a first cost of $45,000, a recovery period of 5 years, and a...
An asset has a first cost of $45,000, a recovery period of 5
years, and a $3000 salvage value. Use the DDB depreciation method
(making sure that last book value equals the salvage value), and
calculate the present worth of depreciation at i = 18% per
year.
Your firm is considering leasing a new computer. The lease lasts for 4 years. The lease...
Your firm is considering leasing a new computer. The lease lasts
for 4 years. The lease calls for 5 payments of $450 per year with
the first payment occurring immediately. The computer would cost
$5,900 to buy and would be depreciated using the straight-line
method to zero salvage over 4 years. The firm can borrow at a rate
of 5%. The corporate tax rate is 20%. What is the NPV of the
lease?
Your firm is considering leasing a new computer. The lease lasts for 4 years. The lease...
Your firm is considering leasing a
new computer. The lease lasts for 4 years. The lease calls for 5
payments of $450 per year with the first payment occurring
immediately. The computer would cost $5,900 to buy and would be
depreciated using the straight-line method to zero salvage over 4
years. The firm can borrow at a rate of 5%. The corporate tax rate
is 20%. What is the NPV of the lease?
Your firm is considering leasing a new computer. The lease lasts for 4 years. The lease...
Your firm is considering leasing a
new computer. The lease lasts for 4 years. The lease calls for 5
payments of $450 per year with the first payment occurring
immediately. The computer would cost $5,900 to buy and would be
depreciated using the straight-line method to zero salvage over 4
years. The firm can borrow at a rate of 5%. The corporate tax rate
is 20%. What is the NPV of the lease?
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