Refer to Problem 12-33. To help pay for the pickup truck the Ogi Corp. obtained a $10,000
Question:
Refer to Problem 12-33. To help pay for the pickup truck the Ogi Corp. obtained a $10,000 loan from the truck dealer, payable in four end-of-year payments of $2500 plus 10% interest on the loan balance each year.
(a) Compute the after-tax rate of return for the truck together with the loan. Note that the interest on the loan is tax deductible, but the $2500 principal payments are not.
(b) Why is the after-tax rate of return computed in part (a) so much different from the 12.5% obtained in Problem 12-33?
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 73% (19 reviews)
a Year Principal pymt Rem Balance Interest 1 2500 7500 1000 2 2500 5000 750 3 2500 2500 500 4 2500 0 ...View the full answer
Answered By
Ann Wangechi
hey, there, paying attention to detail is one of my strong points, i do my very best combined with passion. i enjoy researching since the net is one of my favorite places to be and to learn. i am a proficient and versatile blog, article academic and research writing i possess excellent English writing skills, great proof-reading. i am a good communicator and always provide feedback in real time. i'm experienced in the writing field, competent in computing, essays, accounting and research work and also as a Database and Systems Administrator
4.90+
151+ Reviews
291+ Question Solved
Related Book For
Question Posted:
Students also viewed these Economics questions
-
The Ogi Corporation, a construction company, purchased a pickup truck for $14,000 and used MACRS depreciation in the income tax return. During the time the company had the truck, they estimated that...
-
A pickup truck has a clean drag-area CDA of 35 ft2. Estimate the horsepower required to drive the truck at 55 mi/h (a) clean and (b) with the 3- by 6-ft sign in Fig. P7.88 installed if the rolling...
-
Four $10 000 bonds bearing interest at 6% payable quarterly and redeemable at par on September 1, 2024, were purchased on January 23, 2012, to yield 5% compounded quarterly. Determine (a) The premium...
-
Seanna OBrien receives pension payments of $3200 at the end of every six months from a retirement fund of $50 000. The fund earns 7% compounded semi-annually. (a) How many payments will Seanna...
-
1. A doughnut shop sells a dozen doughnuts for $7.95. Beyond the fixed costs (rent, utilities, and insurance) of $165 per day, it costs $1.45 for enough materials and labor to produce a dozen...
-
Measuring interest expense. GSB Corporation issued semiannual coupon bonds with a face value of $110,000 several years ago. The annual coupon rate is 8%, with two coupons due each year, six months...
-
The following information is taken from the annual report of The Coca- Cola Company: Calculate the receivable turnover ratio and the receivable collection period for 2014 and 2015. How much...
-
The following partially completed process cost summary describes the May production activities of Raman Company. Its production output is sent to its warehouse for shipping. Prepare its process cost...
-
Five reason why leader succed are 1. They are Hard working 2. They are emotionally stable 3. They have hunger for learning 4. They encourage 5. They are result oriented Explain the 5 reason.
-
Consider sender 2 in Figure 7.6. What is the sender's output to the channel (before it is added to the signal from sender 1). Z 2 i,m ? Figure 7.6 Senders T 3510g no 150 299R INRITOnini d=-1 Data...
-
Bill Cavitt owns a data processing company. He plans to buy an additional computer for $20,000, use the computer for 3 years, and sell it for $10,000. He expects that use of the computer will produce...
-
The management of a private hospital is considering the installation of an automatic telephone switchboard, which would replace a manual switchboard and eliminate the attendant operator's position....
-
Assume TH = 425 K, T0 = 298 K, TC = 250 K and QC = 20 kW in the above system of problem 2-5-36[GX]. (a) Determine the maximum COP of the system. (b) If the collector captures 0.2 kW/m2, determine the...
-
How do database management systems handle table locking and concurrency control mechanisms to ensure data consistency and isolation levels during concurrent read and write operations on shared tables...
-
Is conflict resolution the most important skill that leaders need? Why or why not? What other skills are important in building working relationships?
-
How do NoSQL databases diverge from traditional relational databases in terms of data modeling paradigms, consistency models, and scalability architectures, and what are the implications for...
-
How do relational databases integrate with emerging technologies and paradigms, such as microservices architecture, cloud computing, and containerization, to support modern application development...
-
Available infrastructure, skill needs and response time mostly affect which of the four Global Network Design Decisions?
-
Structural Systems, Inc., had accounts receivable of \($20,000\) at the beginning of the year and \($50,000\) at year-end. Revenue for the year totaled \($100,000.\) How much cash did Structural...
-
Find an equation of the given line. Slope is -2; x-intercept is -2
-
Refer to problem 1. What is the total amount of interest paid over the life of the loan? Data From Problem 1 Compute the required monthly payment on a $160,000, 25-year fixed-rate mortgage with a...
-
Suppose that you are obtaining a personal loan from your uncle in the amount of $30.000 (now) to be repaid in three years to cover some of your college expenses. If your uncle usually earns 9%...
-
Suppose you have the alternative of receiving either $22,000 at the end of five years or P dollars today. Currently, you have no need for money, so you could deposit the P dollars in a bank that pays...
-
You are about to borrow $15000 from a bank at an interest rate of 8% compounded annually. You are required to make three equal annual repayments the amount of $5,820.50 per year, with the first...
-
It was interesting to hear Mr John Pearce comment on investors "switching" from growth funds (with relatively higher risk) to conservative funds (with relatively lower risk).And then, as the impact...
-
Last year Janet purchased a $ 1 , 0 0 0 face value corporate bond with an 1 1 % annual coupon rate and a 2 5 - year maturity. At the time of the purchase, it had an expected yield to maturity of 9 ....
-
Tutorial: It is common that in cultures where the relationships are involuntary (Collectivistic), there is a need for more explicit relationship rules; as opposed to individualistic cultures. Why
Study smarter with the SolutionInn App