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melisa1 [442]
3 years ago
15

Dakota Trucking Company (DTC) is evaluating a potential lease for a truck with a 4-year life that costs $40,000 and falls into t

he MACRS 3-year class. If the firm borrows and buys the truck, the loan rate would be 10%. The cost of capital (WACC) for this company is also 10%. The truck will be used for 4 years, at the end of which time it will be sold at an estimated residual value of $10,000. The lease terms call for a $10,000 lease payment (4 payments total) at the beginning of each year. DTC's tax rate is 30%. Should the firm lease or buy? (Note: MACRS rates for Years 1 to 4 are 0.33, 0.45, 0.15, and 0.07.)

Business
1 answer:
Afina-wow [57]3 years ago
7 0

Answer:

The company should borrow or buy the truck as it is less costly than leasing.

Explanation:

Detailed solution is given below

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Ceteris paribus​, in a closed​ economy, if consumers become more optimistic​ ________.
alexandr402 [8]

Ceteris paribus​, in a closed​ economy, if consumers become more optimistic​ the equilibrium interest rate should increase .

So the answer is the equilibrium interest rate should increase

5 0
3 years ago
Suppose that Michelle buys a cappuccino from Paul's Cafe and Bakery for $4.75. Michelle was willing to pay up to $6.75 for the c
miv72 [106K]

Answer:

$2

$3.50

Explanation:

Consumer surplus is the difference between the willingness to pay of a consumer and the price of the good.

Consumer surplus = willingness to pay – price of the good

$6.75 - $4.75 = $2

Producer surplus is the difference between the price of a good and the least price the seller is willing to sell the product

Producer surplus = price – least price the seller is willing to accept

$4.75 - $1.25 = $3.5

7 0
2 years ago
While at a garage sale, jenna purchased a set of used plastic baby bottles. she noticed the symbol "7" in a triangle on the bott
grigory [225]
<span>I would tell Jenna that she first needs to research what the 7 on the bottom of the bottles means. This number is in reference to the specific type of plastic used in the bottles. She needs to make sure this plastic has not been deemed as dangerous for infants. Once cleared, she should thoroughly wash the bottles and use them.</span>
6 0
3 years ago
Stock A has an expected return of 10% and a standard deviation of 20%. Stock B has an expected return of 13% and a standard devi
Nina [5.8K]

Answer:

Expected Portfolio return = 0.5(10)+0.5(13)= 5+6.5=11.5%

Expected Portfolio SD= 0.5(20)+0.5(30)= 25%

Beta of A, 10= 5+B(6)

5=6B

B= 5/6= 0.833

B of B, 13=5+B(6)

8=6B

B=8/6

B=1.33

b. Portfolio AB's standard deviation is 25%

c. Stock A's beta is 0.8333

These two statements are correct

Explanation:

3 0
3 years ago
A company has budgeted direct materials purchases of $300,000 in July and $480,000 in August. Past experience indicates that the
enyata [817]

Answer: $696,000

Explanation:

Given the following;

JULY direct material purchase = $300,000

AUGUST BUDGET

direct material purchase =$480,000

Selling and administrative expenses = $48,000

Depreciation expense = $36,000

Purchase of office equipment = $72,000

Wages expenses = $150,000

Only 70% of the amount of purchases made in a month being paid that month. The remaining 30% paid the next month

Therefore, total Budgeted cash disbursement for the month of August will include ;

30% of July purchase

0.3 × $300,000 = $90,000

70% of August direct material

0.7 × $480,000 = $336,000

Wage expense = $150,000

Office equipment purchase =$72, 000

Selling and administration expenses = $48,000

= $(90,000 + 336,000+ 150,000+72,000+ 48,000) = $696,000.

3 0
3 years ago
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