Vehicle price $50000(including 10% GST).Lease end value $20000.All cash flows should be discounted at a MONTHLY level. For the buyanalysis, the truck will constitute the only asset within the applicable CCA pool and will NOT be replaced by another truck purchase. Your company’s marginal tax rate is 40.00%. The company's fiscal year end is Dec 31. Assume any taxes owing (or refunds) are made (received) in the January immediately following the fiscal year end. Before-tax cost of debt is 6.50%. The applicable CCA pool for this vehicle is Class 10 (30% declining balance)
1. What is the PV of the depreciation (CCA) tax shield if buying this vehicle?
2. What is the estimated salvage value of the truck at the end of the 60 month lease term? Provide evidence to support this value in your analysis.
3. What is the NPV of buying and leasing?
Answers
The PV of the depreciation (CCA) tax shield if buying this vehicle: $28,017.
To calculate the PV of the depreciation tax shield, we first need to calculate the amount of tax shield generated by the CCA deduction. The CCA deduction for Class 10 is 30% declining balance, so the CCA for the first year will be:
CCA = 30% x $50,000 = $15,000
The tax shield for this year will be equal to the CCA multiplied by the company's marginal tax rate:
Tax Shield = $15,000 x 40% = $6,000
To calculate the PV of the tax shield, we need to discount the tax shield at the monthly cost of debt. The monthly cost of debt is:
Cost of Debt = 6.50% / 12 = 0.54%
Using a financial calculator, the PV of the tax shield is $28,017.
The estimated salvage value of the truck at the end of the 60-month lease term is $20,000. This is given in the problem statement.
To calculate the NPV of buying and leasing, we need to calculate the cash flows for each option and discount them to their PV using the monthly cost of debt. For buying, the cashflows are:
PV of Depreciation Tax Shield = $28,017
Initial Cost = -$50,000
Salvage Value = $20,000
Total Cash Flows = -$50,000 + $28,017 + $20,000 = -$1,983
For leasing, the cash flows are:
Lease Payments = 60 x $900 = -$54,000
Salvage Value = $20,000
Total Cash Flows = -$54,000 + $20,000 = -$34,000
Discounting these cash flows using the monthly cost of debt, we get:
NPV of Buying = -$1,983 / (1 + 0.54%)^60 = -$26,080
NPV of Leasing = -$34,000 / (1 + 0.54%)^60 = -$44,290
Comparing the NPVs, it is more advantageous to buy the vehicle rather than leasing it, as the NPV of buying is higher.
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Related Questions
Which of the following is NOT true about emergency funds?
a,They can keep you from borrowing money from friends and family.
b,They help remove the worry about expenses not in the budget.
c,They are used for anything listed on the budget.
d,They help you prepare for unexpected expenses.
Answers
Answer:
The answer is "They are used for anything listed on the budget."
The option that is NOT true about emergency funds is: c. They are used for anything listed on the budget.
What is emergency funds?Emergency funds are usually not used for things that are planned and included in the budget. Instead, emergency funds are money saved specifically for unexpected expenses that you didn't plan for in your usual budget.
The reason for having an emergency fund is to have money saved for unexpected things that might happen, like when someone gets hurt and needs to go to the hospital or when a car or home needs fixing. It can also help if someone loses their job or if something else happens that they didn't expect.
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Describe the goal of a good financial manager according to you?
Answers
Financial managers increasingly assist executives in making decisions that affect the organization, a task for which they need analytical ability and excellent communication skills.
Financial managers’ main responsibility used to be monitoring a company’s finances, but they now do more data analysis and advise senior managers on ideas to maximize profits. They often work on teams, acting as business advisors to top executives.
Prepare financial statements, business activity reports, and forecasts
Monitor financial details to ensure that legal requirements are met
Supervise employees who do financial reporting and budgeting
Review company financial reports and seek ways to reduce costs
Analyze market trends to find opportunities for expansion or for acquiring other companies
Help management make financial decisions
2. List three interpersonal skills that sales associates need.
Answers
Answer:
problem solving, communication, organizational
Explanation:
these help you be the best business associate there is.
Manufacturing overhead ______. multiple select question.
a. contains fixed costs
b. consists of many different types of costs
c. is an indirect cost
d. is directly traceable to units produced
Answers
Answer:
B. consists of many different types of costs
Manufacturing overheads is such cost that consists of many types of costs, and is also directly traceable to the number of units produced. Therefore, the options B and D hold true.
What is the significance of manufacturing overheads?Manufacturing overheads can be referred to or considered as the overheads that are incurred by a producer in the process of manufacturing the units to be sold in the business. These costs are incurred for the purpose of profit-making.
The overheads of manufacturing consist of different types of costs, and division of the incurred overheads by the total manufactured units will give an idea of the per-unit cost for the firm.
Therefore, the options B and D hold true and state regarding the significance of manufacturing overheads.
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1. Buyers, sellers, and producers all have someone else they are competing with for economic benefits. This is known as:
O competition
O monopoly
O collusid
O cartels
Answers
Answer:monopoly
Explanation:
Explain the importance of team dynamics (plz help)
Answers
Team dynamics in the workplace are important because they impact creativity, productivity and effectiveness. Since group work is integral to organisations, improving group dynamics can lead to better work outcomes, customer satisfaction and an improved bottom line.
What is the difference between exempt and nonexempt jobs?
Answers
the system of shifting itemized deductions into one year such that the amount of itemized deductions exceeds the standard deduction for the year, and then deducting the standard deduction the next year is known as
Answers
Bunching is the practice of taking the standard deduction in the following year.
Itemized deductions are used by individual taxpayers to reduce their tax liability. These are expenses that are tax deductible and can be deducted from AGI to lessen a taxpayer's overall tax liability. The amount of a tax burden reduction that an individual taxpayer may be eligible for will ultimately depend on their tax bracket and filing status. Only taxpayers who qualify for standard deductions have access to these alternatives. A tax-deductible expense is one that is incurred by an individual taxpayer on a variety of goods or services with the sole purpose of deducting the cost from their federal income tax liability. This type of expense is known as an itemized deduction and can be claimed on FIT (federal income tax) returns.
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Don' Pizza ell an 8-inch circular pizza for £5 and a 12-inch circular pizza for £10. Both are the ame thickne. Calculate the area of a circle with a diameter of 8 inche
Answers
The area of the circular pizza is 50.26 sq. inches. which is a diameter of 8 inches as per the given data.
The given data is:
The diameter of the circular pizza is 8 inches.
The radius of the circular pizza is calculated by using the formula,
Radius = (Diameter/2)
Radius = (8/2)
Radius = 4 Inches.
Therefore, the radius of the circular pizza is 4 inches.
The following formula can be used to determine the circle's area:
Circle area of pizza = (22/7) * (radius) * (radius)
Circle's area is equal to (22/7)*4*4.
Circle's area is 50.26 square inches.
The Area of a Circular Pizza is 50.26 Square Inches, we can deduce.
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The complete question is-
Don sells an 8-inch circular pizza for £5 and a 12-inch circular pizza for £10. Both are the same thickness. Calculate the area of a circle with a diameter of 8 inches.
The government can make money by borrowing from its population in the form of governmental bonds.
A. True
B. False
Answers
Answer:
False
Explanation:
What would be the total cost of software F
over time?
$[?]
$6,000
Software E
Software F
$10,000
Satisfaction 75%.$0
Not Satisfied
Satisfaction,
Not Satisfied
25% $12,500
90%-$0
10% $5,000
Enter
Answers
The total cost of software F over time is - $3000.
The total cost of software E over time is $1,900.
Data and calculations:
Software cost F = 10,000
Satisfaction rate with F software = 75%
Cost of satisfaction level = 0
Dissatisfaction level cost = 12,500
Percentage of unsatisfied = 25%
The total cost of F software over time is - $3000 {($10,000 x $75% - $0) + ($10,000 x $25% - $12,500)}.
Software cost X = 6,000
Satisfaction rate with software X=90%
Cost of satisfaction level = 0
Dissatisfaction level cost = 5,000
Percentage of unsatisfied = 10%
The total cost of E software over time is $1,900 {($6,000 x 90% - $0) + ($6,000 x 10% - $5,000)
What is total cost?Total cost refers to the amount of economic cost of production and consists of variable cost, which varies depending on the quantity of a good produced with inputs such as labor and raw materials, plus fixed cost, which is independent of the quantity of a good produced plus inputs that cannot be varied in the short term such as buildings and machinery, together with possibly sunk costs.
Therefore, the correct answer is as given above.
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what is the most important aspect of the computer and why
Answers
Answer:
Explanation:
I had the same question for my class, and I answered this, and it worked
Computers are complex machines that consist of many different components, each of which plays an important role in their overall function. Some of the most important aspects of a computer include the following:
1. Central Processing Unit (CPU) - The CPU is the "brain" of the computer and is responsible for executing instructions and performing calculations. It is the most important component of the computer because it determines how fast the computer can process data and perform tasks.
2. Memory (RAM) - Memory, or Random Access Memory, is used to temporarily store data and instructions while the computer is running. It is important because it allows the computer to access data quickly, which can improve performance.
3. Storage (Hard Disk Drive or Solid State Drive) - Storage is used to store data and programs on the computer. It is important because it allows the computer to access data even when it is turned off, and it provides a space to store important files and documents.
4. Graphics Processing Unit (GPU) - The GPU is responsible for rendering graphics and images on the computer. It is important for tasks such as gaming, video editing, and graphic design.
Overall, each of these components is important in its own way, and they work together to make the computer function properly. The most important aspect of the computer may depend on the specific task being performed, as different components may be more important for different tasks.
In a game of pool, the white cue ball hits the #5 ball and stops, while the #5 ball moves away with the same velocity as the cue ball had originally. Both balls have the same mass. This type of collision is-
Answers
This type of collision is an example of an elastic collision.
In an elastic collision, the total kinetic energy of the system is conserved, and the objects bounce off each other with no loss of energy due to deformation or other factors.
Kinetic energy is a type of energy that an object possesses by virtue of its motion. It is defined as the energy that a moving object has due to its motion and is dependent on the object's mass and velocity.
In this case, the #5 ball moves away with the same velocity as the cue ball had originally, indicating that the two balls had an elastic collision.
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If a company receives cash from a customer before performing services for the customer, then:.
Answers
Answer:
assets increase and liabilities increase. ... individual accounting record of increases and decreases in specific asset, liability, and stockholders' equity items.
What is a typical first transaction for a business?
Answers
Answer:
In summary, that first business transaction involved the exchange of goods and/or services between buyers and sellers. Initially it probably took place in the context of kin altruism and later expanded to reciprocal altruism.
Explanation:
if the financial statements cannot be relied upon because they contain one or more material departures from gaap, which type of audit opinion will be issued by the auditor?a- Qualified opinionb- Disclaimerc- Adverse opiniond- Unqualified opinion
Answers
If the financial statements cannot be relied upon because they contain one or more material departures from GAAP, then the qualified opinion will be issued by the auditor.
What are financial statements?Financial statements are written records that reflect a company's operations and financial performance. Financial statements are often audited by government agencies, accountants, businesses, etc. to ensure accuracy and for tax, financing, or investment purposes.
A financial statement is a combination of three main reports about a company. This includes the company's cash flow statement, income statement and balance sheet. All three together give a complete picture of the health of the company.
What is GAAP?
It stands for Generally Accepted Accounting Principles.
The four fundamental limitations associated with GAAP include objectivity, materiality, consistency and prudence. Objectivity includes issues such as auditor independence and verifiability of information
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1. Which of the following questions would be permissible to ask during an interview with a candidate who
is in a wheelchair?
1.Does your disability affect you in any other way besides being unable to walk?
2.This job involves making photocopies. How would you perform that task?
3.Did you become disabled on the job?
4.We like 90 percent or better attendance. Do you have to visit the doctor a lot because of your disability?
Answers
Answer:
I would say the first one
Explanation:
beacuse you do need to know if there is anything that could be hard for them to do and make it where they cant do there job it also might depnd on the job of what you would ask them but I would say the fist one so it gets to the point and isent rude hope this helps :)
true or false, to advance the progress completion percentage in a smartbook assignment, only one question per concept must be answered correctly
Answers
Answer:
FalseExplanation:
A SmartBook assignment's progress completion % may not always be dependent on correctly answering just one question per idea. The requirements for increasing a SmartBook assignment's progress completion percentage can change based on the particular assignment, the course, and the instructor. It could be determined by properly answering a predetermined number of questions overall, a predetermined number of questions in each topic area, or by doing a predetermined number of activities or evaluations inside the assignment. The easiest way to find out the precise requirements for raising the progress completion percentage in a SmartBook assignment is to study the assignment instructions or speak with the instructor.
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2. a bank reports a daily 95% var as $15 million. assuming daily and 10-day returns follow a normal distribution, the 99% 10-day var is (a) $15m (b) $47m (c) $212m (d) $67m
Answers
a bank reports a daily 95% var as $15 million. assuming daily and 10-day returns follow a normal distribution, the 99% 10-day var is $67M
A normal distribution is defined by what?
A data set with a normal distribution is set up so that the majority of the values cluster in the middle of the range and the remaining values taper off symmetrically in either direction.
One straightforward example of something that exhibits a normal distribution pattern is height: The majority of people are average height, there are roughly equal numbers of taller and shorter people, and only a very small percentage of people are either extremely tall or extremely short.
Because of its flared shape, a normal distribution's graphic representation is occasionally referred to as a bell curve. The precise shape may change depending on how the population is distributed, but the peak and curve are always symmetrical and in the middle.
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Describe the last time you made a purchase based on possession utility. What factors influenced your purchase?
Answers
Answer: price, reviews of the product, and the overall quality of the item.
Explanation:
Answer:
price, reviews, and quality
Explanation:
If you are interviewed by more than one person, you should send a thank-you note to _____.
each person in the interview
each person you see in the building
the first person you are introduced to
the person who is obviously leading the interview
Answers
Answer:
option A is correct.
i.e.
each person in the interview.
Explanation:
Because thank-you letter provides a simple but effective way to express gratitude to all the individuals you met with.
XYZ Streaming services wants to be able to provide programming recommendations to their customers. What type of supervised data mining technique is most used?
a. linear regression model
b. classification and regression trees
c. Naïve Bayes classifiers
d. k nearest neighbors method
Answers
One of the most widely used supervised data mining techniques for programming recommendations to customers by streaming services is the classification and regression trees (CART) method. The CART model is one of the most commonly used supervised learning algorithms used in data mining.
It is a decision tree-based technique that includes a set of rules for sorting data into categories or predicting numerical values. It is commonly used for programming recommendations by streaming services by analyzing viewer behavior and content properties to provide personalized recommendations to their customers. The CART method is a popular approach in this area since it helps in predicting the probability of an event occurring and assists in making predictions and classifying data.
It is used for the identification of viewers’ preferences, as well as for predicting and classifying programs in a manner that is aligned with the behavior of their customers. The linear regression model, Naïve Bayes classifiers, and the k nearest neighbors method are also used in data mining but they are not specifically designed for programming recommendations to customers by streaming services.
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In the cash flow information for the ping kings project, ping spent $300,000 for research and development of the golf clubs. Ping's tax rate is 25%. How much of this cost should be included in the initial (t = 0) cash flow for this project?.
Answers
The initial (t = 0) cash flow for the Ping Kings' Project should account for $300,000 of the expenditure.
Should the costs of research and development be capitalized?For the majority of businesses, research and development is an investment that will pay off over a number of years in terms of revenue, cash flow, and profit; as a result, it should ideally be capitalized as an asset rather than expensed.
Research and development costs are regarded as sunk costs under U.S. GAAP and should not be capitalized.
Why is R&D a cost rather than a capital expense?The major reason businesses aren't allowed to capitalize their R&D expenses is because it's impossible to accurately estimate the charges' potential return on investment. Research and development involves a lot of trial and error.
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g alex and maria just purchased their first home in paso robles, california for $1,000,000 and were able to make a down payment of $200,000. since the couple is concerned about rising interest rates over the next few years, the couple's best financial strategy would be:
Answers
Due to rising interest rate, Alex and Maria can rebalance their investment options and expenses regularly. This financial strategy may help keep to pay the loan without financial stress.
What do you mean by financial strategy?A finance strategy combines strategic and financial planning. Finance Strategy is a method for the deliberate growth of the finance function built upon a crystal-clear vision, strategy, and development plan. Focusing on opportunities that generate value requires building on insights from a business environment, stakeholder expectations, and own performance and capabilities.
You may determine your financial needs, the resources needed to support and accomplish your goals, as well as the overarching goal of your organization, using a financial strategy. You can also plan for future expansion to ensure the success and sustainability of your firm.
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What would the new optimal solution of product 3 sold for $15, and 100 hours of labor could be purchased?.
Answers
Answer:
I don't know sorry sorry forgive me
Explanation:
sorry
Which of these is a way to grow
a business without sacrificing
equity?
A. take out a loan
B. review the budget
C. seek investors
Answers
What does the term 'user
experience' refer to regarding a
website?
A. the overall ease of navigation and ability to
purchase on a company's website
B. the general experience a customer has when
using a product of a business
C. the customer experience when dealing with
customer service representatives
Answers
Answer:b
Explanation:
If the price elasticity of supply is 1.5, and a price increase led to a 3% increase in quantity supplied, then the price increase is about
Select one:
a. 0.2%.
b. 0.5%.
c. 2.0%.
d. 4.5%
Answers
In the event, the price elasticity of supply is 1.5, and a cost increment prompted a 3% increment in the amount provided, then the price increase is approximately 2.0%.
The option (C) is correct.
To work out the rate change in price, we can utilize the recipe:
Percentage change in price = (Percentage change in quantity supplied) / Price elasticity of supply
Considering that the price elasticity of supply is 1.5 and the amount provided expanded by 3%, we can substitute these qualities into the recipe:
Percentage change in price = (3%) / 1.5
Percentage change in price = 2%
Therefore, the price increase is approximately 2%.
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your grandmother tells you a dollar doesn't go as far as it use to. she says the "purchasing power" of a dollar is much less than it used to be. explain what she means. try to use and explain terms like inflation and deflation in your answer
Answers
Back then. A dollar was worth WAYYYYY more than it is now. back then you could buy a lollipop for a like a penny. However as time went on we went through deflation and prices went down
Suppose that a worker in Cornland can grow either 40 bushels of corn or 10 bushels of oats per year, and a worker in Oatland can grow either 5 bushels of corn or 50 bushels of oats per year. There are 20 workers in Cornland and 20 workers in Oatland. If the two countries do not trade, Cornland will produce and consume 400 bushels of corn and 100 bushels of oats, while Oatland will produce and consume 60 bushels of corn and 400 bushels of oats. If each country made the decision to specialize in producing the good in which it has a comparative advantage, then the combined yearly output of the two countries would increase by
Answers
Answer:
see. I hope it's helpful for you lolExplanation:
i need friend lol can you my friend
