A company could sell a building for $250,000 or lease it for $2,500 per month. What would need to be considered in determining if the lease option would be preferred?
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A: First Lease = $2160 Months(n)=60 Rate (r) =1% = 0.01 Second Lease Let LEase Payment = X Lease paid…
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A: Present Value It is the concept which states that an amount of money in the future is less worth…
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A: Yes, Atrium’s owner should go with a lease at $24 base rent, move-in allowances, and tenant…
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A: Given data, SF=100,000 Annual rent =$25 Vacant=5% Operating expenses,Taxes and Insurance =$7
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A:
Q: A// A civil engineer wants to invest $ 72000 in a new loader, if the income from temporary leasing…
A: Given information: Investment amount : $72,000 Expected income : $14,000 Interest rate : 14%
Q: An owner of the Atrium Tower Office Building is currently negotiating a five-year lease with ACME…
A: Size of Rentable Office Space is 20,000 square feet Base Rent of ACME is $15 per square foot…
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A: Discounting is a technique through which the present value (PV) of the future amount is computed by…
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A: Lease period is the period for which lease is availed by the lessee. Lessee is required to pay the…
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A: The question is based on the concept of lease accounting.
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A: Given information: Initial cost : $125,358 Annual income : $17,777 Annual expenses : $8,147 Salvage…
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Q: our firm is considering purchasing an old office building with an estimated remaining service life…
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Q: A company is deciding whether to lease or buy new equipment that can be purchased for $33,000. If…
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A: Given: Given:
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A: NAL or net advantage of lease is simply the benefit of lease over buying optionz it is given by NAL…
Q: A firm needs to either buy or lease $200,000 worth of equipment. The equipment has a life of 5 years…
A: Leased at a cost = $45,000Tax shield = Lease payment ×Tax rateTax shield = 45000 ×33%Tax shield =…
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Q: Joanna Browne is considering either leasing or purchasing a new Chrysler Sebring convertible that…
A: Given, Retail price suggested = $33,000 Capital payment = $3,300 Monthly payment = $494 Down payment…
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A: Initial cost of alternative 1 = $90,000 Operating cost of alternative 1 = $450 per day Operating…
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A: Given: Construction cost= $1,000,000 NOI (60℅ probability) = $150,000 NOI (40℅ probability) =…
Q: Northwest Lumber Company needs to expand its facilities. To do so, the firm must acquire a machine…
A: (a) Formulation: computation:
Q: RKE & Associates is considering the purchase of a building it currently leases for $30,000 per…
A: Investment recovery Investment Amount / Lease per year = PVAF ( Interest rate, years )
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A: Answer Lease payment = $24,000 Time at beginning Tax rate = 25% Lease payment after tax = ($24,000…
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A company could sell a building for $250,000 or lease it for $2,500 per month. What would need to be considered in determining if the lease option would be preferred?
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- Part ILynbrook, Inc. is considering leasing a CAT Scan machine for its operations. As the Controller of Lynbrook, you have been asked to provide management with the lease information related to the CAT Scan. Lynbrook is considering leasing the machine from Capital Leasing, who in turn purchased the machine from the manufacturer, ScanHouse Corp. for $1,000,000. Required:Round your answers to the nearest whole dollar amounts.1. How should this lease be classified by Lynbrook and by Capital Leasing?2. Prepare appropriate entries for both Lynbrook and Capital Leasing from the beginning of the lease through the second rental payment on April 1, 2020. Depreciation and amortization are recorded at the end of each fiscal year (December 31).3. Assume Lynbrook leased the machine directly from the manufacturer, ScanHouse Corp., which produced the machine at a cost of $800,000. Prepare appropriate entries for ScanHouse from the beginning of the lease through the second rental payment on April 1,…Company A leases computer servers to Company B for five years. At the end of the five years, Company B will assume ownership of the servers. Company B will then send the servers to one of their international locations. Which finance lease classification test does the scenario represent? O Alternative use O Transfer of ownership O Lease term O Purchase optionCould someone explain how to get the Lease Liability of $100,000?
- An owner of the Atrium Tower Office Building is currently negotiating a five-year lease with ACME Consolidated Corp. for 20,000 rentable square feet of space. ACME would like a base rent of $20 per square foot with step-ups of $1 per year beginning one year from now. Atrium would provide full service under the lease terms. The owner of Atrium Tower believes that the $20 lease is too low and is trying to negotiate $24 per square foot with the same step-ups. However, Atrium would provide ACME with a $50,000 move-in allowance and $100,000 in tenant improvements (TIs) if the lease at $24 PSF is signed.a. Assuming that Atrium’s owner believes that his required rate of return on investment should be 10 percent per year, is the $24 in rents per square foot combined with the move-in allowance and TIs justified?b. ACME informs Atrium that it has 1 year remaining on its existing 20,000-square-foot lease in an older building at $15 per square foot. ACME is willing to pay Atrium $23 per square…Dunbar Corporation can purchase an asset for $40,000; the asset will be worthless after 14 years. Alternatively, it could lease the asset for 14 years with an annual lease payment of $3,841 paid at the end of each year. The firm's cost of debt is 5%. The IRS classifies the lease as a non-tax-oriented lease. What is the net advantage to leasing? Enter your answer as a positive value. Do not round intermediate calculations. Round your answer to the nearest cent. $Reynolds Construction (RC) needs a piece of equipment that costs 200. RC can either lease the equipment or borrow 200 from a local bank and buy the equipment. Reynoldss balance sheet prior to the acquisition of the equipment is as follows: a. (1) What is RCs current debt ratio? (2) What would be the companys debt ratio if it purchased the equipment? (3) What would be the debt ratio if the equipment were leased and the lease not capitalized? (4) What would be the debt ratio if the equipment were leased and the lease were capitalized? Assume that the present value of the lease payments is equal to the cost of the equipment. b. Would the companys financial risk be different under the leasing and purchasing alternatives?
- How do you treat repair and maintenance costs in lease versus purchass decision? Fewa's management has been considering moving to a new downtown location and they are concerned that these plans may come to fruition prior to the expiration of the lease. If the move occurs, Fewa would buy or lease an entirely new set of equipment, and hence management would like to include a cancellation clause in the lease contract. What impact would such a clause have on the riskiness of the lease from Fewa's standpoint? From the lessor's standpoint? If you were the lessor, would you insist on changing any of the lease terms if a cancellation clause were added?Suppose you work for a data processing company who needs a new supercomputer now. Your company can either buy the supercomputer for $400,000 or lease it from a computer leasing company through an operating lease. The maintenance will be provided by the leasing company. Your company will not incur any other costs except the lease payment. But the annual maintenance cost will cost the leasing company$25,000 per year for four years. The lease terms require your company to make four annual payments at the beginning of each year. The computer could be depreciated for tax purposes straight-line over four years and it will have no residual value at the end of year 4. The interest rate is 12%. Suppose the tax rate paid by your company is 21% but the leasing company pays only 15% tax due to carried over losses from their previous operation. What is the pre-tax lease payment amount that will help the leasing company break even within 4 years if it requires 8% return. What is the NPV of the…An owner of the Atrium Tower Office Building is currently negotiating a five-year lease with ACME Consolidated Corporation for 20,000 rentable square feet of office space. ACME would like a base rent of $15 per square foot with step-ups of $1 per year beginning one year from now. ATRIUM would provide ACME a $53,000 moving allowance and $130,000 in tenant improvements (TIs). What is the effective rent (per SF) assuming a discount rate of 10%?
- Bird Wing Bedding can lease an asset for 4 years with payments of $24,000 due at the beginning of the year. The firm can borrow at a 9% rate and pays a 25% federal-plus-state tax rate. The lease qualifies as a tax-oriented lease. What is the cost of leasing? Do not round intermediate calculations. Round your answer to the nearest dollar.Use the information for Escapee Company from BE21.20. Assume the same facts, except Escapee guarantees a residual value of $9,000 at the end of the lease term, which equals the expected residual value of the machinery. (a) Does this change your answer from BE21.20? (b) What if the expected residual value at the end of the lease term is $5,000 and Escapee guarantees a residual of $9,000?The Olsen Company has decided to acquire a new truck. One alternativeis to lease the truck on a 4-year contract for a lease payment of $10,000 per year, withpayments to be made at the beginning of each year. The lease would include maintenance.Alternatively, Olsen could purchase the truck outright for $40,000, financing with a bankloan for the net purchase price, amortized over a 4-year period at an interest rate of 10%per year, payments to be made at the end of each year. Under the borrow-to-purchasearrangement, Olsen would have to maintain the truck at a cost of $1,000 per year, payableat year-end. The truck falls into the MACRS 3-year class. The applicable MACRS depreciationrates are 33%, 45%, 15%, and 7%. The truck has a salvage value of $10,000, which is theexpected market value after 4 years, at which time Olsen plans to replace the truck regardlessof whether the firm leases the truck or purchases it. Olsen has a federal-plus-state taxrate of 40%.a. What is Olsen’s PV cost of…