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Problem 18-4 "TUTOR PLEASE SEE ATTACHED EXCEL SP...

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Problem 18-4 "TUTOR PLEASE SEE ATTACHED EXCEL SPREADSHEET FOR INSTRUCTIONS THANK YOU Lease versus Buy eBook Big Sky Mining Company must install $1.5 million of new machinery in its Nevada mine. It can obtain a bank loan for 100% of the purchase price, or it can lease the machinery. Assume that the following facts apply: The machinery falls into the MACRS 3-year class. Under either the lease or the purchase, Big Sky must pay for insurance, property taxes, and maintenance. The firm's tax rate is 40%. The loan would have an interest rate of 13%. The lease terms call for $400,000 payments at the end of each of the next 4 years. Big Sky Mining has no use for the machine beyond the expiration of the lease, and the machine has an estimated residual value of $250,000 at the end of the 4th year. What is the present value cost of ownership? Round your answer to the nearest cent. $ (869965.97) What is the present value cost of leasing? Round your answer to the nearest cent. $ (798462) What is the NAL of the lease? Round your answer to the nearest cent. $ 71503.97

 

Paper#10233 | Written in 18-Jul-2015

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