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Use the following information for questions 1 3 - 1 6 . You are looking at purchasing a widget producing machine that will cost $
Use the following information for questions You are looking at purchasing a widget producing machine that will cost $ million which will be salvageable in years for $ million. The machine will increase revenues by $ million per year and will fall into the CCA bracket. You can lease the machine for $ million per year. Your pretax cost of debt is Your corporate tax rate is What is the present value of the CCA tax shield? a $ b $ c $ d $ e $ What is the NPV of the purchase? a $ b $ c $ d $ e $ What is the net advantage to leasing NAL a$ b$ c$ d$ e$ What would the pretax lease payment have to be for you to be indifferent between leasing or buying? a $ b $ c $ d $ e $ You are looking buying a nuclear reactor which has a fair market value of $ Alternately, you can lease it for the next ten years. Your after tax cost of debt is Your tax rate is What would the minimum pretax lease payment have to be for it to qualify as a capital lease? a $ b $ c $ d $ e $
Use the following information for questions You are looking at purchasing a
widget producing machine that will cost $ million which will be salvageable in
years for $ million. The machine will increase revenues by $ million per year and
will fall into the CCA bracket. You can lease the machine for $ million per
year. Your pretax cost of debt is Your corporate tax rate is
What is the present value of the CCA tax shield?
a $
b $
c $
d $
e $
What is the NPV of the purchase?
a $
b $
c $
d $
e $
What is the net advantage to leasing NAL
a$
b$
c$
d$
e$
What would the pretax lease payment have to be for you to be indifferent between
leasing or buying?
a $
b $
c $
d $
e $
You are looking buying a nuclear reactor which has a fair market value of
$ Alternately, you can lease it for the next ten years. Your after tax cost of
debt is Your tax rate is What would the minimum pretax lease payment have to be for it to qualify as a capital lease?
a $
b $
c $
d $
e $
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