Question

In: Finance

Your company is considering the purchase of a fleet of cars for $200,000. It can borrow...

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. $1,802

b. $3,434

c. $1,134

d. $3,961

e. $5,399

Solutions

Expert Solution

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

jeff jeffy answered 11 months ago
Next > < Previous

Related Solutions

Your company is considering the purchase of a fleet of cars for $200,000. It can borrow...
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....
Your company is considering the purchase of a fleet of cars for $195,000. It can borrow...
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...
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....
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....
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...
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 employees’ field work rather...
An engineering firm is considering purchasing a fleet of cars for their employees’ 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...
X Company is considering the purchase of a new processor that costs $200,000. Shipping and setup...
X Company is considering the purchase of a new processor that costs $200,000. Shipping and setup costs for the processor are estimated to be $15,000. X’s working capital requirement is expected to increase by $17,000 when the new processor begins operation and is expected to be fully recoverable at the end of the project. The processor’s useful life is expected to be 5 years and its salvage value at that point is estimated to be $25,000. Estimated revenues and expenses...
1. A company with a fleet of 1500 cars found that the emissions systems of 17...
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...
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...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT