ASSIGNMENT 7 TSM.xlsx - task Wolfson corporation has...

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task Wolfson corporation has decided to purchase a new machine that costs$3.2 million. The machine wi straight-line basis and will be worthless after four years. Corporation tax 35%. The Sur bank has offer for $3.2 million. The reapyment schedule is four yearly principal repayments of $800000 and an inte a should wolfson lease the machine or buy it with bank financing b. What is the annual lease payment that will make wolfson indifferent to whether it leases 0 1 2 3 4 lease payment -950000 -950000 -950000 -950000 tax saving on lease 332500 332500 332500 332500 put positive if purchasing, tax saving on depreciation -280000 -280000 -280000 -280000 cost of equipment 3200000 NCF 2582500 -897500 -897500 -897500 -280000 NAL -46247.78 DECISION buy LEASE PAYMENT THAT WOULD BE INDIFFERENT lease payment -930667.995 -930668 -930667.9951767 -930668 tax saving on lease 325733.7983 325733.8 325733.7983119 325733.8 tax saving on depreciation -280000 -280000 -280000 -280000 cost of equipment 3200000 NCF 2595065.803 -884934.2 -884934.1968649 -884934 -280000 NAL 0.00 DECISION TASK 2 An asset costs $620000 and will be depreciated in a straight line manner over its three ye at 7% and the lessee borrows at 9%. Corporation tax 34% for both companies.

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