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4. The lessee's lease analysis Consider the case of Hack Wellington Co. (HWC): Hack Wellington Co. (HWC) is considering the purchase of new manufacturing equipment that will cost $35,000 (including shipping and installation). HWC can take out a 4-year, $35,000 loan to pay for the equipment at an interest rate of 8.40%. The loan and purchase agreements will also contain the following provisions:
Note: Hack Wellington Co. (HWC) is allowed to take a full-year depreciation tax-saving deduction in the first year. Based on the preceding information, complete the following tables: (Note: Round the annual loan payment value to two decimal places and all other values to the nearest dollar.)
Thus, the net present value (NPV) cost of owning the asset will be: 1. $27,854 2. -$22,520 3. -$23,020 4. $19,787 Hack Wellington Co. (HWC) has been offered an operating lease on the same equipment. The four-year lease requires end-of-year payments of $1,400, and the firm will have the option to buy the asset in four years for $7,700. The firm will want to use the equipment longer than four years, so it plans to exercise this option. All maintenance will be provided by the lessor. What is the NPV cost of leasing the asset? (Note: Round your answer to the nearest dollar.) 1.-$11,626 2. –$32,714 3. -$9,301 4. -$2,286 Should HWC lease or buy the equipment? Lease Buy |
In: Finance
Why has the Global South lagged far behind the Global North in its comparative level of well-being and development? What might the consequences be if the Global North does not offer its financial and political support to the Global South? Give 500 - 700 words (citations if possible)
In: Economics
Teddy Bower is an outdoor clothing and accessories chain that purchases a line of parkas at $10 each from its Asian supplier, TeddySports. Unfortunately, at the time of order placement, demand is still uncertain. Teddy Bower forecasts that its demand is normally distributed with mean of 2,100 and standard deviation of 1,200. Teddy Bower sells these parkas at $22 each. Unsold parkas have little salvage value; Teddy Bower simply gives them away to a charity and receives a tax credit of 20% COGS. Teddy has decided to sell rainboots to supplement its parkas product offerings. Rainboots are also procured from an outside supplier at a cost of $10/rainboot, but this time the supplier is located in South Carolina. As a result, it only takes the supplier 3 weeks to fulfill an order (once placed) and it costs $300 to ship the order. As with parkas, demand for rainboots is uncertain; as opposed to parkas, demand for rainboots exists throughout the year. Teddy Bower has the ability to carry inventory at a minimal annual carrying cost estimated to be 10% of the product cost (any unsold rainboots can be held in inventory to meet future demand). Teddy Bower estimates the annual demand for rainboots to be normally distributed with a mean of 4000 and standard deviation of 1000. Given the high profit margin on rainboots, Teddy Bower does not want to lose more than 2% of potential sales for rainboots. When should Teddy Bower submit an order to its supplier for (more) rainboots? When the current inventory (in-stock) is… a. between 250-350 b. between 350-450 c. between 550-650 d. between 650-750 e. between 750-850 How much should Teddy Bower order? a. 500 to 1000 b. 1000 to 1500 f. 1500 to 2000 g. 2000 to 2500 h. 2500 to 3000 i.
In: Operations Management
21.5% of flowers of a certain species bloom "early" (before May 1st). You work for an arboretum and have a display of these flowers
a) In a row of 35 flowers, what is the probability that 8 will bloom early?
b) In a row of 35 flowers, what is the probability that fewer than 9 will bloom early?
c) As you walk down a row of these flowers, how many flowers do you expect to have to observe (on average) in order to see the first one that blooms early? (Keep your answer as a decimal.)
d) In a row of 50 flowers, what is the probability that more than 8 will bloom early?
e) In a row of 50 flowers, what is the probability that between 8 and 14 (inclusive) will bloom early?
f) In a row of flowers, what is the probability that you will have to observe 6 flowers in order to see the first one that blooms early?
g) In a row of flowers, what is the probability that you will observe more than 7 flowers to see the first one that blooms early?
In: Statistics and Probability
Why do you think health insurance in America is as complicated as it is?
In: Operations Management
Is FDIC insurance for deposits up to $250,000 a good or bad for America?
In: Finance
Write one page on recent Developments in Chinese Trade with America
In: Economics
Write one page on recent Developments in Chinese Trade with America
In: Economics
What factors have shaped the growth patterns of Latin America?
In: Economics