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Questions on bonds, refunding, lease or buy

Please see the attached file. Bonds and Leasing Q1 (R company) bonds trade at 100 today. The bonds pay semiannual interest thatis paid on January 1 and july 1 . the coupon on the bond is 10 percent. How much will you pay for a )r) bond if today is a. March 1. b. October 1 c. July 1 d. August 15 Q2 (B company) intend

Deferred Taxes

I'm keep getting jumbled up with the numbers! PLEASE HELP ME! I need help with Section A. Something to just keep my number straight!

Amortization Schedule and Journal Entries for Lessee - Windom Co.

Started the problem but I'm having trouble with it and I don't know if the work I did is correct or not. Windom co. as lessee records a capital lease of machinery on January 1, 2008. The seven annual lease payments of 350,000 are made at the end of each year. The present value of the lease payments at 10% is 1,704,000. Windom u

Leasing and Owning

I need assistance with this problem, I do not know what I am doing wrong. I can not match the book answer. Assume the tax rate is 40% and the equipment's depreciation would be $100 per year. If the company leased the asset on a 2-year lease, the payment would be $110 at the beginning of each year. If Boston's borrowed and b

Leasing and Ownership

Explain the pros and cons to leasing over ownership of an asset. Explian a specific item, for example, interest, floatation costs, call premium, of how to use refunding tools and techniques to minimize the cost of capital.

Analyzing Lease Vs. Buy Decisions

Summarize different capital budgeting concepts by answering the following questions: 1) What risks and uncertainties should be considered while making a lease vs. buy decision? How do these risks and uncertainties impact capital budgeting? 2) What is the advantage of computing the present value of outflows in making lease

Leasing and Capital Structure

1) Which of the following statements is most correct? Firms which use "off balance sheet" financing, such as leasing, will show lower debt ratios once the effects of their leases are reflected in their financial statements. Capitalizing a lease means that the firm issues equity capital in proportion to its current capital

Which of the following is not necessary for bailment?

3a. Which of the following is not necessary for bailment? a. Duty to return the property to the owner b. Actual delivery of possession c. Personal property d. B and C e. A and B 3b. The moral theory of ethical relativism can best be characterized by: a. the belief that the moral rules should be determined by persons who have

Business Problem: Lease or Buy

6. Hanna-Charles Company needs to add a new fleet of vehicles for their sales force. The purchasing manager has been working with a local car dealership to get the best value for the company dollar. After some negotiations, a local dealer has offered Hanna-Charles two options: 1) a three year lease on the fleet of cars or

Capitalization of Leases that Do Not Meet the SFAS 13 Criteria

Under SFAS No. 13, leases that do not meet one of the four criteria for a capital lease are treated as operating leases. Argue for the capitalization of leases that do not meet any of the SFAS 13 criteria for a capital lease. Your argument should take into consideration the conceptual framework definitions of assets and liab

Brookdale Clothing

Please the attached file. Brookdale Clothing The treasurer for Brookdale Clothing must decide how much money the company needs to borrow in July. The balance sheet for June 30, 2004 is presented below: Brookdale Clothing Balance Sheet June 30, 2004 Cash $75,000 Accounts payable $

Southwest Airlines Co - Balance Sheet

You have been presented with the following selected information taken from the financial statements of Southwest Airlines Co. SOUTHWEST AIRLINES CO. Balance Sheet (partial) December 31 (in millions) 2004 2003 Total current assets $ 2,172 $ 2,313 Noncurrent assets 9,165 7,565 Total assets $ 11,337 $ 9,878 C

Southwest Airlines Co - Balance Sheet

You have been presented with the following selected information taken from the financial statements of Southwest Airlines Co. SOUTHWEST AIRLINES CO. Balance Sheet (partial) December 31 (in millions) 2004 2003 Total current assets $ 2,172 $ 2,313 Noncurrent assets 9,165 7,565 Total assets $ 11,337 $ 9,878 C

Lease Vs. Buy - Sadik Industries

This is a is a lease vs buying that I have been struggling with. How do you work this? Sadik Industries must install $1 million of new machinery in its Texas plant. It can obtain a bank loan for 100% of the required amount. Alternatively, a Texas investment banking firm which represents a group of investors believes that it c

Olga Counterman's motel and restaurant rents

Olga Counterman's motel and restaurant rents its facilities from Z-B corporation. Olga has been paying 10% of the motel and restaurant's total sales to Z-B. This past year the sales breakdown was as follows: Rooms $4,500,000 Food 800000 Telephone 50000 Miscellaneous 50000 Total $5,400,000 Z-B Corporati

Deciding which base to close

The U.S. Defense Department has the difficult decision of deciding which military bases to shut down. Military and political factors obviously matter, but cost savings are also an important factor. Consider two naval bases located on the West Coast?one in Alameda, California, and the other in Everett, Washington. The Navy has de

Amortization Schedule and Journal Entries for Lessee

Laura Leasing Company signs an agreement on January 1, 2007, to lease equipment to Plote Company. The information at the top of page 1136 relates to this agreement. 1. The term of the noncancelable lease is 5 years with no renewal option. The equipment has an estimated economic life of 5 years. 2. The fair value of the asset

Lease Payment

26. Real Estate, Inc., has purchased a building for $1 million. The economic life of the building is 30 years and it will be fully depreciation over the 30 years using the straight-line depreciation method. The discount rate is 14% and the corporate tax rate is 35%. What is the minimum lease payment the company should ask for?

Computing Values and Assessing Financial Statements

McDonalds 2004 financial statements contain the following selected data (in millions) Current Assets $2,857.8 Total Assets 27,837.5 Current Liabilities 3,520.5 Total Liabilities 13,636 Interest exp. $358.4 Income taxes 923.9 Net income 2,278.5 a) Compute the following values and provide a brief interpreta

Business Analysis - Your friend, Mike, has just purchased a business

Your friend, Mike, has just purchased a business. He has asked for you help in evaluating the firm. Mike is not asking you to make a decision for him; he just wants you to help provide him with facts as you see them. The task is to analyze the business and report your findings. Be sure to tell Mike everything that you can thi

Lease Classifications - Doherty Company

Lease Classifications Doherty Company leased equipment from Lambert Company. The classification of the lease makes a difference in the amounts reflected on the balance sheet and income statement of both Doherty and Lambert. a. What criteria must be met by the lease in order that Doherty Company classifies it as a capital l

renovating a leased office.

You are thinking about renovating a leased office. The renovations would cost $180,000, and would be depreciated straight-line to zero over the five years remaining on the lease. The new office would save you $22,500 per year in heating and cooling costs. Also, absenteeism should be reduced and the new image should increase r

Value Enhancing Strategies

1. In your words, briefly describe a synergy. Why are synergies so important? 2. Why do such a large portion of mergers and acquisitions fail to meet the pre-acquisition targets. 3. Explain how lease rates are calculated (by the lessor)150-200 words 4. Choose 1 of the following Value drivers and briefly discuss why it is im

Enterprise Risk - Joe Bob signs an equipment lease with Eddie's Rentals.

Joe Bob signs an equipment lease with Eddie's Rentals. The contract contains this clause: "Lessor disclaims all liability arising from injuries caused by use of this equipment." The starter pull cord on the grass dethatcher Joe Bob rented snapped, putting out Joe Bob's eye and lacerating his lip. Joe Bob sues Eddie's for his

Present Value, Positive and Negative Aspects

The company you work for is expanding and will need to obtain additional production equipment. Your manager is looking for a cost analysis of whether the company should buy or lease equipment. See attachment for data. 1) Calculate the PV for each option in the attached appendix. 2) List out three positive aspects of th

Ed owns Oak Knoll Apartments

Ed owns Oak Knoll Apartments. During the year, Fred, a tenant, moved to another state. Fred paid Ed $1,000 to cancel the two-year lease he had signed. Ed subsequently rented the unit to Wayne. Wayne paid the first and last months' rents of $800 each and a security deposit of $500. Ed also owns a building that is used as a health

Raymond Rayon Corporation

Raymond Rayon Corporation wants to expand its manufacturing facilities. Liberty Leasing Corporation has offered Raymond Rayon the opportunity to lease a machine for $100,000 for five years. The machine will be fully depreciated by the straight-line method. The corporate tax rate for Raymond Rayon is 25 percent, while Liberty

Lease Vs. Buy - Wolfson Corporation

Wolfson Corporation has decided to purchase a new machine that costs $3 million. The machine will be worthless after three years. Only straight-line method is allowed by the IRS for this type of machine.Wolfson is in the 35-percent tax bracket. The Sur Bank has offered Wolfson a three-year loan for $3 million.The repayment sc