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please help me solve this Q4: A company has interest expenses totaling = $722MM, for which they pay 7%/ annum to their lender. Last year,
please help me solve this
Q4: A company has interest expenses totaling = $722MM, for which they pay 7%/ annum to their lender. Last year, the company paid $827MM in tax, based on earnings before taxes of $4,135M; what amount of additional taxes would the co. pay if they were all equity-financed (i.e., no debt) and what is the PV of tax shield (assume all metrics stay constant in perpetuity)? Q5: A piece of equipment costs $125,000 today to buy, but company YGR Inc. (whose cost of capital = 7.25% ) is considering a lease arrangement. The equipment has an approximate lifespan of 8 years, at which time the salvage value =$15,000. Annual maintenance costs (performed at year-end) are expected to be $1,550 (these are to grow by 3% per year). If the PV of CCA tax shield and PV of lease payments are $32,550 and $72,400, respectively, should YGR Inc. lease the equipment Step by Step Solution
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