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##### Problem 18-4 "TUTOR WILL YOU PLEASE PLACE ANSWERS...

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Problem 18-4 "TUTOR WILL YOU PLEASE PLACE ANSWERS ON A EXCEL SPREADSHEET, THANK YOU VERY MUCH Lease versus Buy 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: 1) 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. 2) The firm's tax rate is 40%. 3) The loan would have an interest rate of 13%. 4) The lease terms call for $400,000 payments at the end of each of the next 4 years. 5) 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. QUESTION #1. What is the present value cost of ownership? Round your answer to the nearest cent. $_______ QUESTION #2. What is the present value cost of leasing? Round your answer to the nearest cent. $_______ QUESTION #3. What is the NAL of the lease? Round your answer to the nearest cent. $_______,Dear tutor thank you for your efforts, question #3 is right but question #1 and #2 are incorrect? can you please check.,Tutor attached is a tool kit for chapter 18 i don't know if it will come in handy,Dear tutor any news on this problem?,Dear tutor thank you for your efforts but below are the questions that I needed answered thank you for your help. Problem 18-4 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. 1) What is the present value cost of ownership? Round your answer to the nearest cent. $_______ 2) What is the present value cost of leasing? Round your answer to the nearest cent. $_______

Paper#7114 | Written in 18-Jul-2015

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