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Jeff & Bezos is a fresh groceries delivery company. The company has access to borrowing funds at a pre - tax rate of 8 %
Jeff & Bezos is a fresh groceries delivery company. The company has access to borrowing funds at a pretax rate of per year. Jeff & Bezos pays income taxes using tax rate.
The company would like to start using highspeed lowaltitude drones to deliver grocery purchases directly to residential customers' backyards. By doing so the company would be saving $ million pretax every single year.
Jeff & Bezos is contemplating leasing the drones for a lease term that matches the drones' economic life. It would lease them from a different company, Nets & Flicks, that currently owns the required number of the drones. Doing that would have an estimated pretax annual cost of $ Nets & Flicks' requirement is that the lease payments are made by Jeff & Bezos at the beginning of each year.
Instead of leasing the fleet of the drones, Jeff & Bezos is also contemplating buying them, which would cost the company $ million. If the company chooses to buy them, the drones would be losing their economic value following the straightline depreciation method during their fiveyear life. The fleet of drones, due to their heavy usage, would have no salvage value at the end.
Jeff & Bezos' net advantage to leasing, or NAL, equals
Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to decimal places, eg If your answer is negative, don't forget to put the minus sign.
The maximum pretax lease payment at which Jeff & Bezos would be willing to sign the lease agreement with Nets & Flicks equals Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to decimal places, eg Your answer should be entered as a positive value.
tableNALLease payment,
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