Question
In: Finance
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 the nearest whole number.)
b. Which is the better option: leasing or
buying?
Solutions
jeff jeffy answered 4 months agoRelated Solutions
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...
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 $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?
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....
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
Utley Corp purchased a new truck on January 1, 2013. The truck cost $30,000, has an...
Utley Corp purchased a new truck on January 1, 2013. The truck
cost $30,000, has an estimated life of eight years, and has an
estimated residual value of $6,000. Utley Corp uses the
double-declining-balance method to compute depreciation.
14.value: 3.00 pointsRequired information What is Utley Corp's
adjusted balance in its Accumulated Depreciation account at the end
of 2014?
$13,125.
$3,750
$11,250.
$1,875
Each of the four independent situations below describes a lease requiring annual lease payments of $30,000....
Each of the four independent situations below describes a lease
requiring annual lease payments of $30,000.
Situation 1
Situation 2
Situation 3
Situation 4
Lease term (years)
4
4
4
4
Asset's useful life (years)
6
6
5
6
Asset's fair value
$132,000
$114,000
$129,000
$115,000
Bargain purchase option?
No
No
Yes
No
Annual lease payments
Beg. of yr.
End of yr.
Beg. of yr.
End of yr.
Lessor's implicit rate (known by lessee)
5%
6%
6%
5%
Lessee's incremental...
Each of the four independent situations below describes a lease requiring annual lease payments of $30,000....
Each of the four independent situations below describes a lease
requiring annual lease payments of $30,000.
Situation 1
Situation 2
Situation 3
Situation 4
Lease term (years)
4
4
4
4
Asset's useful life (years)
6
6
5
6
Asset's fair value
$132,000
$114,000
$129,000
$115,000
Bargain purchase option?
No
No
Yes
No
Annual lease payments
Beg. of yr.
End of yr.
Beg. of yr.
End of yr.
Lessor's implicit rate (known by lessee)
5%
6%
6%
5%
Lessee's incremental...
Two years ago, Bethesda Corporation bought a delivery truck for $30,000 (not subject to the luxury...
Two years ago, Bethesda Corporation bought a delivery truck for
$30,000 (not subject to the luxury auto depreciation limits).
Bethesda used MACRS 200 percent declining balance and the half-year
convention to recover the cost of the truck, but it did not elect
§179 expensing and opted out of bonus depreciation. Answer the
questions for the following alternative scenarios. Use MACRS Table.
(Do not round percentages used for calculations. Loss amounts
should be indicated by a minus sign. Leave no answer...
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