Laura wants to buy a delivery truck. The truck costs $71,000, and will allow her to increase her after tax profits by $27,000 per year for the next 10 years. She will borrow 76% of the cost of the truck for 10 years, at an interest rate of 6%. Laura's unlevered cost of capital is 8% and her tax rate is 22%. The loan includes a $1,000 application fee. What is the NPV of buying the truck on these terms? Please use the APV method.
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- Laura wants to buy a delivery truck. The truck costs $76,000 , and will allow her to increase her after tax profits by $14,000 per year for the next 10 years. She will borrow 82% of the cost of the truck for 10 years, at an interest rate of 6%. Laura’s unlevered cost of capital is 17% and her tax rate is 21%. The loan includes a $2,000 application fee. What is the NPV of buying the truck on these terms? Please use the APV method.Laura wants to buy a delivery truck. The truck costs $53,000, and will allow her to increase her after tax profits by $39,000 per year for the next 10 years. She will borrow 72% of the cost of the truck for 10 years, at an interest rate of 7%. Laura's unlevered cost of capital is 19% and her tax rate is 39%. The loan includes a $1,000 application fee. What is the NPV of buying the truck on these terms?You will need a calculator for this problem. Sanchez earns $4,000, and she wants to save it for retirement, which is 10 years away. She can either save it in a taxable account or put it into a Roth IRA. Suppose that Sanchez can receive an annual rate of return of 8 percent and her marginal tax rate is 25 percent. By the time she reaches retirement, how much money would she have in either option? [Note: Sanchez has to pay tax on the $4,000, so she cannot put the full amount either into the taxable account or the Roth IRA.]
- Joan has a choice of purchasing a car for $20,000 with 9.7% interest cost to borrow and a 3 year repayment period with monthly payment. Leasing the auto would cost $300 a month for a 3 year term. The sales tax is 6%. The car is expected to have a value of $14,000 at the end of the leasing period. Joan can obtain 7% after tax on similar marketable investments. Should she lease or buy the car?Rula has purchased a new car for $20,000. She paid $3,000 as a down payment, and she paid the remaining balance by a loan from her hometown bank. Rula will pay off the loan by equal annual installments of $10058. How many years will it take Rula to pay off the loan, given an opportunity cost of 12%? Answer:b) that his monthly house and property tax payment should not exceed 35% of his disposable monthly income. After researching the market, he determines he can obtain a 30-year home loan for 6.95% annual interest per year, compounded monthly. His monthly property tax payment will be approximately $150. What is the maximum amount he can pay for a house if his disposable monthly income is $2000? A person wants to buy a home. He has been advised A worker borrow $3500 for one year from a friend at an interest rate of 1.5% per month instead of taking a loan from a bank at a rate of 18% per year. Compare how much money the worker will save or lose on the transaction. An instrument can be bought for $10,000 cash or for d) $2000 down and payments of $750 per year for 15 years. What is the annual interest rate for the time payments? (Hint: you can assume interest rate between 4 and 5 % )
- Jane wants to buy a brand new Toyota Corolla, model year 2021. Today's out-of-the- door cost of the car is $23,452.95 including all taxes and fees. For her bank loan to be approved, she had to make a 12% down-payment and finance the rest over a 5 year period at the simple interest rate of 6% per year due to her fair credit standing. What is her monthly payment? Draw the CFDTori is planning to buy a car. The maximum payment she can make is $3400 per year, and she can get a car loan at her credit union for 7.3% interest. Assume her payments will be made at the end of each year 1–4. If Tori’s old car can be traded in for $3325, which is her down payment, what is the most expensive car she can purchase?Jordan earns an annual salary of $72,000. He is considering buying a house. His lender uses 30% of monthly gross income as a guideline for the maximum PITI (principal repayment, interest, taxes, and insurance). Assume that monthly property taxes and insurance amount to be $600. He can get a 25-year mortgage with annual interest rate of 6%. If he would like to finance 75% of the house, what is the home purchase price that he can afford?
- Joe's Taco Hut can purchase a delivery truck for $20,000, for which he will take out a loan from the bank. He estimates it will generate a net income (after taxes, maintenance, and operating costs) of $4,000 per year. His other option is to go to work for someone else earning net income of $3,000 per year. Assume that Joe can resell the truck for the entire purchase price of $20,000. What is the VMP for the delivery truck (Joe's MB if he buys it)? Please enter your answer as a numerical response and do not type out your answer as words (ie. $3000 not "Three thousand dollars"). Will Joe buy the delivery truck if the interest rate is 3%? Simply type either "Yes" or "No" into the answer box Will Joe buy the delivery truck if the interest rate is 7%? Simply type either "Yes" or "No" into the answer box What is the highest interest rate Joe would be willing to pay? Please enter your answer as a numerical response and do not type your answer as words (ie. 3% not Three percent").Annette wants a home improvement loan to renovate her kitchen. Her bank will charge her 3.6%, compounded quarterly. She already has a 10-year GIC that will mature in 5 years. When her GlC reaches maturity, Annette wants to use the money to repay the home improvement loan with one payment. She wants the amount of the payment to be no more than $20 000. a) How much can she borrow? b) How much interest does she pay?Loni buys a machine for her business. The machine costs $280,000. Loni estimates that the machine can produce a $64,000 cash inflow per year for the next 9 years. Loni's cost of capital is 7 percent. What is the approximate present value of the cash flow benefits for Loni?