Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. please asap. you work as a financial analyst at we

please ASAP. You work as a financial analyst at Wells Fargo. You are performing a...

70.2K

Verified Solution

Question

Finance

please ASAP.

You work as a financial analyst at Wells Fargo. You are performing a lease analysis for a client who owns a furniture company. You want to help your client to find out how much your client should charge a 6-year lease of a new desk to a start-up company. The new desk costs $3,200 and can be depreciated on a five-year MACRS schedule. The companys pretax administrative costs including Maintenance, Insurance and Selling Cost are $250 per year and they occur at the beginning of each year. The after tax cost of capital is 10% and the tax rate is 35%. Lease payments are made in advance, that is, at the start of each year. The inflation rate is zero.

Depreciation Table for 5-year asset

Year % 1) 20.00% 2) 32.00% 3) 19.20% 4) 11.52% 5) 11.52% 6) 5.76%

a. How much is the present value of after tax administrative costs?

b. What is the present value of Depreciation tax Shield?

c. What is the after tax break-even operating lease rate?

d. What is the before tax break even operating lease rate?

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: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Basic Math
1.2K views

The illumination of an object by a light source is directly proportional to the strength of...

Physics
1.2K views

Explain the differences between primary electrons, secondary electrons, Auger electrons, and backscattered electrons and how they are...

Accounting
1.2K views

What employee data is vital for payroll systems to process wages and salaries? Where is the...

Physics
1.2K views

c 40 cm d 20 cm 2 A wire connected in the left gap of...

Geometry
1.2K views

Let ro co yo zo be a fixed point r x y z be a...

Basic Math
1.2K views

A street light is at the top of a 16 ft tall pole A woman...

Calculus
1.2K views

What are the features of the function f x log x 1 graphed below 12...

Accounting
1.2K views

Exercise 3-8 Marigold Corp. opened a dental practice on January 1, 2019. During the first...

Accounting
1.2K views

Milton Company reports the following information for the current year: Units produced this year 45,000...

Accounting
1.2K views

Overhead activity: Car Insurance Premiums. Identify at least three (3) cost drivers for the cost...

Finance
1.2K views

Row 3 needs to be 20% higher than row 4. Write an if statement...

Finance
1.2K views

In each of the following? cases, calculate the price of one share of the foreign...