Question
In: Finance
The Hegan Corporation plans to lease a $890,000 asset to the Doby Corporation. The lease will...
The Hegan Corporation plans to lease a $890,000 asset to the Doby Corporation. The lease will be for 15 years. Lease payments, payable at the beginning of the year. (Use a Financial calculator to arrive at the answers. Round the final answers to nearest whole dollar.)
a. If the Hegan Corporation desires a 11 percent return on its investment, how much should the lease payments be?
Lease payment $
b. If the Hegan Corporation is able to generate $130,000 in immediate tax shield benefits from the asset to be purchased for the lease arrangement and will pass the benefits along to the Doby Corporation in the form of lower lease payments, how much should the revised lease payments be? Continue to assume the Hegan Corporation desires a 11 percent return on the 15-year lease.
Revised lease payment $
Solutions
Expert Solution
a.
Lease Payment per annum = $111,502.76
Since question required using financial calculator, have also provided the same below:
b.
Revised Lease Payment per annum = $95,215.84
Since question required using financial calculator, have also provided the same below:
jeff jeffy answered 1 year agoRelated Solutions
The Hardaway Corporation plans to lease a $880,000 asset to the O’Neil Corporation. The lease will...
The Hardaway Corporation plans to lease a $880,000 asset to the
O’Neil Corporation. The lease will be for 11 years. Use Appendix D
for an approximate answer but calculate your final answer using the
formula and financial calculator methods. a. If the Hardaway
Corporation desires a return of 10 percent on its investment, how
much should the lease payments be? (Do not round intermediate
calculations and round your answer to 2 decimal places.) b. If the
Hardaway Corporation is able...
The Hegan Corporation plans to lease a $830,000 asset to the Doby Corporation. The lease will...
The Hegan Corporation plans to lease a $830,000 asset to the
Doby Corporation. The lease will be for 15 years. Lease payments,
payable at the beginning of the year. (Use a Financial
calculator to arrive at the answers. Round the final answers to
nearest whole dollar.)
a. If the Hegan Corporation desires a 11
percent return on its investment, how much should the lease
payments be?
Lease payment
$
b. If the Hegan Corporation is able to generate...
The Hegan Corporation plans to lease a $830,000 asset to the Doby Corporation. The lease will...
The Hegan Corporation plans to lease a $830,000 asset to the
Doby Corporation. The lease will be for 15 years. Lease payments,
payable at the beginning of the year. (Use a Financial calculator
to arrive at the answers. Round the final answers to nearest whole
dollar.)
a. If the Hegan Corporation desires a 11 percent return on its
investment, how much should the lease payments be?
Lease payment $
b. If the Hegan Corporation is able to generate $125,000 in...
An asset costs $890,000 and will be depreciated in a straight-line manner over its four-year life....
An asset costs $890,000 and will be depreciated in a
straight-line manner over its four-year life. It will have no
salvage value. The corporate tax rate is 21 percent and the
appropriate interest rate is 8 percent.
a. What would the lease payment have to be to make both the
lessor and lessee indifferent about the lease?
b. Assume that the lessee pays no taxes and the lessor pays
taxes. For what range of lease payments does the lease have...
Tamarisk Corporation recorded a right-of-use asset for $259,700 as a result of a finance lease on...
Tamarisk Corporation recorded a right-of-use asset for $259,700
as a result of a finance lease on December 31, 2019. Tamarisk’s
incremental borrowing rate is 11%, and the implicit rate of the
lessor was not known at the commencement of the lease. Tamarisk
made the first lease payment of $49,651 on on December 31, 2019.
The lease requires 7 annual payments. The equipment has a useful
life of 7 years with no residual value.
Prepare Tamarisk's December 31, 2020, entries. (Credit...
Windsor Corporation recorded a right-of-use asset for $240,300 as a result of a finance lease on...
Windsor Corporation recorded a right-of-use asset for $240,300
as a result of a finance lease on December 31, 2016. Windsor’s
incremental borrowing rate is 13%, and the implicit rate of the
lessor was not known at the commencement of the lease. Windsor made
the first lease payment of $41,440 on on December 31, 2016. The
lease requires 9 annual payments. The equipment has a useful life
of 9 years with no residual value.
Prepare Wndor's December 31,2017, entries.
Teal Corporation has signed a 5-year lease for machinery with a cost of $195,000. The asset...
Teal Corporation has signed a 5-year lease for machinery with a
cost of $195,000. The asset has an economical life of 9 years with
zero salvage value. Annual minimum lease payments made at the end
of year are $32,000 and the discount rate is 6%. There is no
bargain purchase option available on the lease.
Identify whether the machinery should be treated as an operating
or capital lease assuming Teal follows ASPE.
The machinery should be treated as a(n) .
Garrison, Inc. purchased an asset for $63,282 and negotiated a non-cancelable lease with Jasper Corporation on...
Garrison, Inc. purchased an asset for $63,282 and negotiated a
non-cancelable lease with Jasper Corporation on January 1, 20X1.
Jasper will lease the asset from Garrison over a 10-year lease
period with annual payments beginning January 1, 20X1. The expected
economic life of the asset is 12 years. Title does not transfer to
the lessee, Jasper, and there is no purchase option or guaranteed
residual value. Assume Garrison’s implicit rate in the lease and
Jasper’s incremental borrowing rate are both...
Is it better to lease or to buy an asset in business?
Is it better to lease or to buy an asset in business?
Omni Enterprises is considering whether to borrow funds and purchase an asset or to lease the asset under an operating lease arrangement.
Omni Enterprises is considering whether to borrow funds and purchase an asset or to lease the asset under an operating lease arrangement. If it purchases the asset, the cost will be $10,000. It can borrow funds for four years at 12 percent interest. The asset will qualify for a 25 percent CCA. Assume a tax rate of 35 percent.
The other alternative is to sign two operating leases, one with payments of $2,600 for the first two years and...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Question 4 The owner of Line Restaurant implemented an expanded menu early last year. The menu...
- Create a table of the following Nervous System and Eye Diseases : African Trypanosomiasis Cryptococcal Meningitis Leprosy...
- Discuss three specific sets of technologies and why they poses challenges for companies. Social Media Cloud...
- You are responsible for updating the predetermined overhead rate for your company, analyzing the current costs,...
- Using a spreadsheet, prepare a cash budget for New Tech for the next year (January through...
- In preparing for the upcoming holiday season, Fresh Toy Company (FTC) designed a new doll called...
- Paul Swanson has an opportunity to acquire a franchise from The Yogurt Place, Inc., to dispense...
ADVERTISEMENT