Question
In: Finance
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.)
Solutions
Expert Solution
WE CAN ALSO SOLVE USING OCF METHOD, BUT THIS IS STILL A
SIMPLE METHOD. THANK YOU
jeff jeffy answered 2 years agoRelated Solutions
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...
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....
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
Johnson Company purchases a $36,000 truck that is estimated to last nine years, with no salvage...
Johnson Company purchases a $36,000
truck that is estimated to last nine years, with no salvage value.
If Johnson uses the straight line method of depreciation, what will
the accumulated depreciation amount to after two years of
use?
a. $0
b. $8,000
c. $9,000
d. $36,000
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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