In: Finance

Your company is considering the purchase of a fleet of cars for $200,000. It can borrow at 6%. The cars will be used for four years. At the end of four years they will be worthless. You call a leasing agent and find that the cars can be leased for $55,000 per year. The corporate tax rate is 34% and the cars belong in CCA class 10 (a 30% class), what is the net advantage to leasing?

a. $1,802

b. $3,434

c. $1,134

d. $3,961

e. $5,399

Your company is considering the purchase of a fleet of cars for
$200,000. It can borrow at 6%. The cars will be used for four
years. At the end of four years, they will be worthless. You call a
leasing agent and find that the cars can be leased for $55,000 per
year. The corporate tax rate is 34% and the cars belong in CCA
class 10 (a 30% class), what is the net advantage to leasing?
Select one:
a....

Your company is considering the purchase of a fleet of cars for
$195,000. It can borrow at 8.5%. The cars will be used for four
years. At the end of four years they will be worthless. You call a
leasing agent and find that the cars can be leased for $55,000 per
year. The corporate tax rate is 34% and the cars belong in CCA
class 10 (a 30% class), what is the net advantage to leasing?
A) $6,594 B)...

A company with a large fleet of cars sets a goal of attaining a
fleet average of at least 26 miles per gallon of gasoline. To see
if that goal is being met, they check the gasoline usage for 50
company trips chosen at random, finding a mean of 25.02 mpg and a
standard deviation of 4.83 mpg.
a) Is this a strong evidence that they have failed to attain
their fuel economy goal? Assume significance level of 0.1.
b)...

Blossom Company is considering these two alternatives for
financing the purchase of a fleet of airplanes.
1.
Issue 51,000 shares of common stock at $40 per share. (Cash
dividends have not been paid nor is the payment of any
contemplated.)
2.
Issue 11%, 10-year bonds at face value for $2,040,000.
It is estimated that the company will earn $801,000 before interest
and taxes as a result of this purchase. The company has an
estimated tax rate of 30% and has...

A city in Ohio is considering replacing its fleet of gasoline
powered cars with electric cars. The manufacturer of the electric
cars claims that this municipality will experience significant cost
savings over the life of the fleet if it chooses to pursue this
conversion. If the manufacturer is correct, the city will save
about $1.5 million. If the new technology employed within the
electric cars is faulty as some critics suggest, it will cost the
city $675,000. A third possibility...

A company is considering the purchase of a $200,000
computer-based inventory management system. It will be depreciated
straight-line to zero over its four-year life. It will be worth
$30,000 at the end of that time. The system will save $60,000
before taxes in inventory-related costs. The relevant tax rate is
39%. Because the new setup is more efficient than the existing one,
the company will be able to carry fewer inventories and thus free
up $45,000 in net working capital....

An engineering firm is considering purchasing a fleet of cars
for their employeesâ€™ field work rather than the current practice of
paying employees $0.40 /km for the use of their own cars. If the
cars were purchased for $30,000, used for 3 years then sold for
$12,000, insurance was $900/year (prepaid at the beginning of the
year), the O&M costs were $0.25/km, the interest rate was
5%/year, and the average travel per year was 25,000 km, what is the
equivalent...

1. A company with a fleet of 1500 cars found that the
emissions systems of 17 out of the 53 randomly selected cars from
their fleet failed to meet pollution control guidelines. If a
significant number of vehicles are found to be out of compliance,
the whole fleet will need to be inspected and brought up to current
regulations. Is there strong evidence that more than 20% of the
fleet might be out of compliance? Use a 1% level of...

Scenario: An academic organisation is considering the purchase
and operation of its own fleet of buses to transport its students
to and from school at the end of this year. The bursar at the
school has confirmed that, if this project can be implemented, the
school will be able to cancel its current contract with the local
bus operator, and as a result, the school will make cash savings of
N$45 600 each year from 2011 onwards, after deducting operating...

A firm is considering the purchase of a new machine at a price
of $200,000. The machine falls into the three-year MACRS
class. If the new machine is acquired, the firm's investment in net
working capital will immediately increase by $20,000 and then
remain at that level throughout the life of the project. At the end
of 3 years, the new machine can be sold for $40,000. Earnings
before depreciation, interest and taxes (EBDIT) are expected to be
as follows with...

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