Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. a travel company is considering obtaining a new bo

A travel company is considering obtaining a new boat for tours. It is expected to...

50.1K

Verified Solution

Question

Finance

A travel company is considering obtaining a new boat for tours. It is expected to cost 3,000,000, have a useful life of three years, and sold for 2,000,000 at that time. It will fall into a 25% CCA rate, the firm's tax rate is 40% and its cost of capital is 14%.

The boat builder is offering a lease (rent) alternative. What is the most the travel company would be willing to pay at the end of each of the three years, before tax, if it decided to lease the boat? The boat will be returned to the leasing company at that time. (You are calculating the pre-tax lease payment amount. Hint, calculate the net cost of ownership as a starting point).

a. 586,111

b. 976,851

c. 289,323

d. 1,000,000

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

Your company is looking at setting up a manufacturing plant overseas to manufacture driverless flying cars....

Finance
Q

What are alcohol's effects on the liver, both short-term and long-term?

Medical Sciences
Q

explain the general trends you see in each graph what do you see or think...

Biology
Q

Applying What You ve Learned 1 Cystic Fibrosis is a genetic condition that affects the...

Biology
Q

In the study of alternating electric current instantaneous voltage is modeled by the equation e...

Physics
Q

For each pair of solids determine whether they are similar If they are give the...

Geometry
Q

Complete the following sentence so that the resulting statement is true.If a line is horizontal,...

Algebra
Q

In 2018, Melissa uses the single filing status, and has $54,000 of taxable income that...

Accounting
Q

Patton Dyes manufactures colorings, primarily for textiles. Information on the work in process follows: Beginning...

Accounting
Q

The following selected accounts and their current balances appear in the ledger of Clairemont Co....

Accounting
Q

When product costs are recognized as expenses? Select one: A. In the period when the...

Accounting
Q

Transactions may have significantly different impacts on a government's budget, governmental fund statements, and government-wide...

Accounting