Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. you work as a financial analyst at wpwilly, inc. y

You work as a financial analyst at WPWilly, Inc. You are evaluating how much Acme...

90.2K

Verified Solution

Question

Finance

image
You work as a financial analyst at WPWilly, Inc. You are evaluating how much Acme Limo should charge la client who will lease a car for 7 years. It will cost Acme $85,000 to buy the car and the car can be depreciated on a five-year MACRS schedule. Acme Limo's pretax administrative costs including Maintenance, Insurance and Selling Cost are $10,000 per year and they occur at the beginning of each year. The after tax cost of capital is 10% and the tax rate is 21%. Lease payments are made in advance, that is, at the start of each year. The inflation rate is zero. a. How much is the present value of after tax administrative costs? (sample answer: $2500.50) b. What is the present value of Depreciation tax Shield? (sample answer: $2500.50) c. What is the after tax break-even operating lease rate for the car? (sample answer: $2500.50) d. What is the before tax break even operating lease rate for the car? (sample answer: $2500.50) Year % 1 20.00% 2 32.00% 3 19.20% 4 11.52% 5 11.52% Depreciation Table for 5-year asset 6 5.76%

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

The speeds of all pitches thrown by the IRSC softball team are normally distributed with...

Statistics
Q

What is the exact procedure for MOLYBDENUM BLUE METHOD using Spectrophotometer to determin phosphorus concenrration.. Pleas provide...

Chemistry
Q

which would be a homeostatic mechanism of the temperature of the testes was too high? 1. contraction...

Medical Sciences
Q

\" Because it does not occur face-to-face, bullies are able to mete out pain without witnessing...

Psychology
Q

A uniformly wound solenoid having an inductance L and resistance R is cut into two...

Physics
Q

Write B as a linear combination of the other matrices if possible If not enter...

Basic Math
Q

7 A commuter must pass through 5 traffic lights on her way to work and...

Statistics
Q

Solve for x 05 29 5 23 5 19 3 5 x 1 8

Algebra
Q

1 Transaction Analysis Chart for each transaction 2 Detail each transaction in the Expanded...

Accounting
Q

QUESTION Abebio Limited is a listed company with a year end of 31 December 2019....

Accounting
Q

Illustration 2. From the foll 70y costing and marginal costing systems

Accounting
Q

12. In August, our company sells inventory to a customer in Switzerland, receivable in Swiss...

Accounting