restion TIOI 22View PoliciesCurrent Attempt in ProgressBonita Industries is purchasing new equipment witha cash cost of $211800 for the assembly line. The manufacturer has offered toaccept $ 45800 payments at the end of each of the next six years. What is the interest rate that Bonita Industries will be paying?O 7%.O 9%.O 6%.O 8%.Save for LaterAttempts: 0 of 1 usedSubmit Answer

Present value = $211,800 Annuity = $45,800 Period = 6

Answered: Bonita Industries is purchasing new…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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A1 Tripple A Manufacturing needs to acquire a piece of equipment which will cost the company $80,000. It is estimated that in six years’ time the equipment can be salvaged for $20,000. The company’s bank has agreed to advance funds for the entire purchase price at 8 percent per annum payable in equal installments over the six years. Alternatively, the machine could be leased over the six years from the manufacturer, by way of an operating lease with annual lease payments of $14,000. Triple A’s tax rate is 40 percent and its cost of capital is 15 percent. The equipment has a CCA rate of 20 percent. If the machine is owned, annual maintenance costs will be $500. Required: Advise Triple A which alternative they should choose, providing them with calculations to support your recommendation. NOTE: PLEASE DONOT SOLVE IN EXCEL
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Bonita Industries is purchasing new equipment with a cash cost of $ 211800 for the assembly line. The manufacturer has offered to accept $ 45800 payments at the end of each of the next six years. What is the interest rate that Bonita Industries will be paying? O 7%. O 9%. O 6%. O 8%.