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help with all parts P3.2 M&B Tooling Ltd. is assessing two available options for the purchase of new equipment with a negotiated cash price of
help with all parts P3.2 M\&B Tooling Ltd. is assessing two available options for the purchase of new equipment with a negotiated cash price of $100,000. The manufacturer is willing to accept a down payment of 20% of the purchase price and an instalment note for the balance. The note would require quarterly fixed principal payments (plus interest) starting October 1, 2023, for a period of two years. M\&B has a proposal from its bank for an instalment loan for two years that requires a fixed blended monthly payment (including both principal and interest) starting August 1, 2023. The loan would be for 80% of the equipment's purchase price. The current market rate of interest is 8%. Both contracts have an interest rate of 8%. Instructions a. Is there any measurement uncertainty in determining which option is best for M\&B? Which discounted cash flow approach should be used in the comparison of the two alternatives? b. Calculate the amount of the payments required of M\&B under each alternative. Use either a financial calculator or Excel functions in your calculation. c. Besides interest costs, what other considerations should M\&B use in making a choice between the two alternatives? d. What financial ratios could be affected by M\&B's choice
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To answer all parts of the question comprehensively lets proceed step by step Part a Measurement uncertainty and discounted cash flow approach There is definitely measurement uncertainty in determinin...Get Instant Access to Expert-Tailored Solutions
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