What is the present value of the cost of leasing? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. Is it cheaper to buy or lease?
Q: Johnson Hardware wants to construct a new building at a second location. If construction could begin…
A: Here, Inflation rate is 3% Cost of New Building is $500,000 Down Payment required is 20% Monthly…
Q: A car dealer leases a small computer with software for $5000 per year. As an alternative he could…
A: Payback Period is the expected time required to recover the initial cost of investment and the…
Q: The initial cost needed to set up your freelancing engineering design service is $50,000. The…
A: Break-even is the point at that point company earns neither profit nor incurs loss. Now, break-even…
Q: A customer is going to buy a brand new pump and motor. It has an initial cost of $10,000. The…
A: To break even, present value of inflows shall be equal to the initial cost of the project.
Q: RKE & Associates is considering the purchase of a building it currently leases for $30,000 per year…
A: NAL (Net advantage to Lease) is benefits that an entity might geberate by leasing an equipment…
Q: Annual maintenance costs for a rotary kiln is P2,000. The placement if a new refractory would reduce…
A: Annual savings for first 5 years = P 700 Annual savings for next 5 years = P 1200 Annual interest…
Q: Your landscaping company can lease a truck for $8,200 a year (paid at year-end) for 5 years. It can…
A: Lease price of the truck = 8200 lease period = 5 years Purchase price of the truck = $35000 Life = 5…
Q: NCC is a company. The company needs a new machine that can either leased or purchased. If it is…
A: In order to compare two different alternatives in regard to the machine, the Net present value of…
Q: $775000, and will last for 5 years. The expected scrap value at the end of 5th year is $140000.…
A: Since you have multiple subparts we solved the first 3 for you . if you want all please repost with…
Q: A bulldozer can be purchased for $380,000 and used for 6 years, when its salvage value is 15% of the…
A: Given: Cost of bulldozer = $380,000 No of years used = 6 years Salvage value = 15% of 380,000 =…
Q: Your factory has been offered a contract to produce a part for a new printer. The contract would…
A: Net Present Value (NPV) Net present value is defined as the summation of the present value of cash…
Q: After deciding to acquire a new car, you can either lease the car or purchase it with a three-year…
A: Lease is a way to get the asset for a fixed time period by paying periodicals payments to other…
Q: Rental equipment is for sale for $110,000. A prospective buyer estimates he would keep the equipment…
A: Given information: Selling price for equipment : $110,000 A prospective buyers estimates that he…
Q: Your landscaping company can lease a truck for $7,600 a year (paid at year-end) for 5 years. It can…
A: In this problem we have to calculate present value FACTOR and from that find our present value and…
Q: A diesel generator for electrical power can be purchased by a remote community for $350,000 and used…
A: 1 Way Cost of diesel generator = $350,000 Number of years used = 10 years Salvage Value = $50,000 2…
Q: what is the maximum amount that the company should pay for the machine today such that the chouices…
A: Loan amortization refers to a schedule which is prepared to shows the periodic loan payments, amount…
Q: What is the annual operation and maintenance costs of owning this vehicle?
A: Time value of money (TVM) is used to measure the value of money at different point of time in the…
Q: Suppose you work for a data processing company who needs a new supercomputer now. Your company can…
A: Net present value is the present value of cash flow and initial investment and if net present value…
Q: An apartment building in your neighborhood is for sale for $175,000. The building has four units,…
A: While choosing which investment project will be undertaken, different investment appraisal…
Q: Consider a processing center that can be purchased at $25000 today and will have a 10 years of…
A: Present worth of an investment is the summation of each cash flow expected to be generated in coming…
Q: The controller has asked you to consider three separate options that your firm has for getting a new…
A: Annual Lease payment for 5 years as follows: Years ALP ALP (Net of Tax) PVF @ 10% PVF ($) 1 15…
Q: You want to buy a new machine. It's going to cost $200,000 and have a salvage value of $15,000 after…
A: Here, Cost = $200,000 Salvage value = $15,000 Time period = 7 years Annual operating costs =…
Q: BiliBala Inc. needs some new equipment. Now the company can choose to either lease or purchase the…
A: Lease accounting
Q: A solar lighting system is to be purchased and installed for 310,000. This system will save…
A: PW is one of the methods of evaluating the profitability of the project. It considered the PV of…
Q: Your rental company wants to purchase a new car for its car rental business. The car costs $20,000.…
A: Lease - A lease is an option that allows using the asset immediately without any down payment. The…
Q: A firm is considering whether to buy specialized equipment that would cost $200,000 and have annual…
A: Net Present Value method (NPV) is one of the Discounted Cash Flow techniques. Under this method,…
Q: Kohlers Inc. is considering a leasing arrangement to finance some manufacturing tools that it needs…
A: Given: Borrowed Amount = $4,800,000Purchase Price = 10%Annual Payments = $2,100,000Annual…
Q: A firm considering the installation of an automatic data processing unit to handle some of its…
A: given, purchase price = P20,000 lease: year 1 = P8000 decrease every year = P1000 n= 4 r=15%
Q: You are thinking of renovating a basement apartment beneath your house, which you currently rent out…
A: Incremental rent per month due to reinovation = C = $ 729 - $ 521 = $ 208Payment frequency =…
Q: Rocky Mountain Bus Tours needs an additional bus for three years. It can lease a bus for $2100…
A: Present value of annuity due (payment due at the beginning of each month) = Payment x [1 - (1 +…
Q: Your old car costs you $300per month in gas and repairs. If you replace it, you could sell the old…
A: Net present value is present value of cash flows. For Alternative 1: Initial cash outflow is the…
Q: Some equipment is needed for a 4-year project. It can be leased for $15,000 annually, or it can be…
A: In order to find the rate of return one has to know the purchased amount and the amount for it was…
Q: You want to by a boat and can afford payments of $350 per month for six years. The monthly interest…
A: Since you have asked multiple questions, we will solve the first question for you. If you want any…
Q: A new heating system is to be purchased and installed for $110,000. This system will save…
A: Net present worth is the present value of cash inflows less present value of cash outflows. Present…
Q: A 2,000 square foot house in New Jersey costs $1,725 each winter to heat with its existing…
A:
Q: Your landscaping company can lease a truck for $8,400 a year (paid at year-end) for 7 years. It can…
A: The decision of lease and buy has been taken on the basis of cost. The decision which has less cost…
Q: A database marketing firm can lease its computer equipment with beginning-of-quarter payments of…
A: Quarterly lease payment (Q) = $10,000 Loan amount (L) = $131,200 Resale value (Z) = $33,000…
Q: You are the owner of a book store and you are considering adding a coffee bar to your store. The…
A: NPV is the net current worth of cash flows that are expected to occur in the future.
Q: The Wildwood Widget Company needs a milling machine for its new assembly line. The machine presently…
A: Present worth analysis is an analysis in which we convert all the cash flows to present worth using…
Q: teven's Auto Detailers is trying to decide whether to lease or buy some new equipment for polishing…
A: Net advantage to leasing (or NAL) is the amount of money saved in case a person or a business leases…
Q: You invest in a piece of equipment costing $30,000. The equipment will beused for two years, at the…
A: Calculation of the equivalent net savings per machine hour is shown:
Q: Your landscaping company can lease a truck for $9,000 a year (paid at year-end) for 7 years. It can…
A: Given the following information: Lease value of truck - $9,000 a year (paid at year-end) for 7…
Q: It costs $30,000 to retrofit the gasoline pumps at a certain filling station so the pumps can…
A: A discounted payback period is the time period in which a project will pay back its investment from…
Q: RKE & Associates is considering the purchase of a building it currently leases for $30,000 per…
A: Investment recovery Investment Amount / Lease per year = PVAF ( Interest rate, years )
Q: SPiderplot HiTek Manufacturing is purchasing a large tract of land for a new facility. Its loan is…
A: Loan Amount = $3 million Interest rate = 10%
Q: A construction firm needs a new small loader. It can be purchased for $20,000. The firm expects the…
A: Purchase cost = $ 20,000 Annual cost = $ 1400 Salvage value = $ 6,000 Period = 7 Years Annual…
Q: You are in the process of getting a new car but are not sure if you should buy or lease. The total…
A: A lease refers to a contract where one party gives another party the right to use property or…
Your landscaping company can lease a truck for $7,200 a year (paid at year-end) for 6 years. It can instead buy the truck for $35,000. The truck will be valueless after 6 years. The interest rate your company can earn on its funds is 7%.
a. What is the
b. Is it cheaper to buy or lease?
c. What is the present value of the cost of leasing if the lease payments are an
d. Is it now cheaper to buy or lease?
LEASE
Lease is an agreement between two parties where one party agrees to take the other parties property for rent and guarantees regular payments for a specified period of time.
In lease financing only less initial cash investments are required and also there are some tax benefits.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- Your landscaping company can lease a truck for $8,400 a year (paid at year-end) for 7 years. It can instead buy the truck for $44,000. The truck will be valueless after 7 years. The interest rate your company can earn on its funds is 8%. a. What is the present value of the cost of leasing? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. Is it cheaper to buy or lease? c. What is the present value of the cost of leasing if the lease payments are an annuity due, so the first payment comes immediately? (Do not round intermediate calculations. Round your answer to 2 decimal places.) d. Is it now cheaper to buy or lease? Your landscaping company can lease a truck for $8,400 a year (paid at year-end) for 7 years. It can instead buy the truck for $44,000. The truck will be valueless after 7 years. The interest rate your company can earn on its funds is 8%. a. What is the present value of the cost of leasing? (Do not round intermediate calculations. Round…Your landscaping company can lease a truck for $8,150.00 a year for 4 years. It can instead buy the truck for $23,388.56. The truck will be valueless after 4 years. a. What is the present value of the lease payments, If the interest rate your company can earn on its funds is 11.00%. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Present value b. Is it cheaper to buy or lease? buy leaseYour company is trying to decide whether it should purchase a copier from Xerox or lease it. The copier has an expected life of 6 years, after which it has only marginal value (you can ignore any residual value). If you purchase it, the price is $145,000, payable now, and you would have to pay an annual service charge of $8,000. If you lease it, you would have an annual payment of $36,000 each year (for 6 years), which includes service. The lease payment and the annual service charge occur at the beginning of each year. The interest rate is 3.8%. Which option is least costly?
- You work for a nuclear research laboratory that is contemplating leasing a diagnostic The scanner costs RM6,300,000 and it would be depreciated straight-line to zero over four years. You can lease it for RM1,745,000 per year for four years. Assume that the tax rate is 36%. You can borrow at 8% before taxes. Justify whether you should lease or buy. Calculate the depreciation of the machine for each year. RM 6.3 mil /4 = ? Calculate the tax shield. RM 1,575,000 x 0.36 = RM 567,000 Calculate after tax lease payment RM1,745,000 x (1 – 0.36) = RM 1,116,800 Yr 0 Yr 1 Yr 2 Yr 3 Yr 4 After Tax Lease Payment RM 1,116,800 RM 1,116,800 RM 1,116,800 RM 1,116,800 Depreciation tax shield RM 567,000 RM 567,000 RM 567,000 RM 567,000 Cost of Machine (RM 6.3 mil) Total Cash Flow (RM 6.3 mil) ? ? ? ?…Annuity Due. Your landscaping company can lease a truck for $8,000 a year (paid at year-end) for 6 years. It can instead buy the truck for $40,000. The truck will be valueless after 6 years. The interest rate your company can earn on its funds is 7%. (LO5-3) What is the present value of the cost of leasing? Is it cheaper to buy or lease? What is the present value of the cost of leasing if the lease payments are an annuity due, so the first payment comes immediately? Is it now cheaper to buy or lease?You are the owner of a small boutique. You need to decide if you should upgrade your storage and display counters. The total cost is $2,000, and the depreciation rate is 8% per year. The expected increase in next year’s revenues as a result of the investment is $400. Assuming an annual interest rate of 5%, answer the following questions: (a) What is the present value of the benefits? (b) What is the present value of the costs? (c) Should you make this investment?
- Please solve correctly . You are considering purchasing a dump truck. The truck will cost $75,000 and have operating and maintenance costs that start at $18,000 the first year and increases by $2,000 per year. Assume that the salvage value at the end of five years is $22,000 and interest rate is 15%. What is the annual operation and maintenance costs of owning this vehicle?A forklift will last for only 4 more years. It costs $6,500 a year to maintain. For $20,000 you can buy a new lift that can last for 10 years and should require maintenance costs of only $3,500 a year. a-1. Calculate the equivalent cost of owning and operating the forklift if the discount rate is 4% per year. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. a-2. Should you replace the forklift? b-1. Calculate the equivalent cost of owning and operating the forklift if the discount rate is 14% per year. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. b-2. Should you replace the forklift? a-1. Equivalent cost a-2. Should you replace the forklift? b-1. Equivalent cost b-2. Should you replace the forklift? $ Yes $ No 23,594.51 18,256.40A forklift will last for only 3 more years. It costs $6,000 a year to maintain. For $17,000 you can buy a new lift that can last for 8 years and should require maintenance costs of only $3,000 a year. a-1. Calculate the equivalent cost of owning and operating the forklift if the discount rate is 5% per year. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. a-2. Should you replace the forklift? b-1. Calculate the equivalent cost of owning and operating the forklift if the discount rate is 12% per year. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. b-2. Should you replace the forklift? a-1. Equivalent cost a-2. Should you replace the forklift? b-1. Equivalent cost b-2. Should you replace the forklift?
- You have to buy a new copier. The cost of the copier is $1,900, plus $415 per year in maintenance costs. The copier will last for five years. Alternatively, a local company offers to lease the copier to you and do the maintenance as well. If your discount rate is 6.5%, what is the most you would be willing to pay per year to lease the copier (your first lease payment is due in one year)? (Select the best choice below.) A. The most you would be willing to pay per year to lease the copier is $415. B. The most you would be willing to pay per year to lease the copier is $3,624.61. C. The most you would be willing to pay per year to lease the copier is $872.21. D. The most you would be willing to pay per year to lease the copier is $1,900.You can buy property today for $3.1 million and sell it in 6 years for $4.1 million. (You earn no rental income on the property.) a. If the interest rate is 7%, what is the present value of the sales price? (Do not round intermediate calculations. Enter your answer in millions rounded to 3 decimal places.) b. Is the property investment attractive to you? yes or no c-1. What is the present value of the future cash flows, if you also could earn $210,000 per year rent on the property? The rent is paid at the end of each year. (Do not round intermediate calculations. Enter your answer in millions rounded to 3 decimal places.) c-2. Is the property investment attractive to you now? yes or no15. Your landscaping company can lease a truck for $8,000 a year (paid at year-end) for 6 years. It can buy the truck for $40,000. The truck will be valueless after 6 years. a. If the interest rate your company can earn on its funds is 7%, is it cheaper to buy or lease? b. If the lease payments are an annuity due, is it cheaper to buy or lease?