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all answers for same question hurry plz Encore Mobile wants to lease production equipment from ABC Co. The payments are $200,000 per year for 5
all answers for same question
Encore Mobile wants to lease production equipment from ABC Co. The payments are $200,000 per year for 5 years payable at the beginning of each year. Encore won't have to worry about annual maintenance costs if the equipment is leased: ABC Co. has agreed to service the equipment at no additional charge. As an alternative, the bank offered to lend Encore Mobile a loan of 5950.000 to purchase the equipment. The loan would be paid in equal instalments at the end of each year for 5 years at an annual interest rate of 11%. At the end of 5 years, the equipment could be sold for an estimated $250,000. However. Encore Mobile would have to pay for annual maintenance fee of the machine estimated at $14,000 per year. Encore Mobile's cost of capital is 13% and the tax rate is 40%. The equipment belongs to a CCA class with a rate of 25% 1. PV of Leasing Payments: O($883.605) ($874 640) ($479,000) ($630,000) 2. PV of Leasing Tax Savings is: O$338,559 O$331,559 O$250,000 O$350,267 3. PV Maintenance cost is ($35,621) (542,345) ($34,814) O$32,719 4. PV Salvage Value is: $135,690 Os312,675 O5332,670 OS435,786 5. PVCCAIS: O$354,789 $421,590 O$778,532 $249.751 hurry plz
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