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SVEN [57.7K]
3 years ago
7

A company is planning to move to a larger office and is trying to decide if the new office should be owned or leased. Cash flows

for owning versus leasing are estimated as follows. Assume that the cash flows from operations will remain level over a 10 year holding period. If purchased, the company will invest $385,000 in equity and finance the remainder with an interest-only loan that has a balloon payment due in year 10. The after-tax cash flow from sale of the property at the end of year 10 is expected to be $750,000. What is the incremental rate of return on equity to the company, if the property is owned instead of leased

Business
1 answer:
skad [1K]3 years ago
5 0

Answer:  13.26%

Explanation:

Year 0 Investment = $385,000

Incremental Cash flow every year = Cashflow if owned - Cashflow if leased

= 164,000 - 133,000

= $31,500

Incremental cashflow in Year 10 = Incremental Cashflow + Cashflow from sale of property

= 31,500 + 750,000

= $781,500

Using Excel and the IRR function, the rate is = 13.26%

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The BRS Corporation makes collections on sales according to the following schedule:
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Answer:

$110,300

Explanation:

June collections will comprise of

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71% of May sales

4% of April sales

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=25/100 x 100,000

=$25,000

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Total June collections

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3 years ago
On time transport verified that it had a receipt showing that 2,000 air filtration units had been delivered to its warehouse. Wh
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The bill of lading is the type of receipt that provides information showing that 2,000 air filtration units had been delivered to its warehouse.

<h3>What is a bill of lading?</h3>

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1 year ago
Type the correct answer in the box. Spell all words correctly. Whar happens to you tax liability with proper financial planning?
Shalnov [3]

Answer:

Minimize

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3 years ago
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A market penetration strategy attempts to increase sales of present products among<u> existing customers.</u>

<h3>What is penetration price strategy?</h3>

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8 0
1 year ago
Hodgkiss corporation is evaluating an extra dividend versus a share repurchase. in either case, $25,960 would be spent. current
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