chapter 22.xlsx - US CAD 1 1 1 Forward contract 7000000 a 0.93499 b 6544930 a*b Option 1 Option 2forward Call contract Option No-Action 1 6544930

chapter 22.xlsx - US CAD 1 1 1 Forward contract 7000000 a...

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US CAD No-Action 1 1 6544930 7013475 7500000 1 0.9 6544930 5925000 6750000 1 1.1 6544930 6300000 8250000 Forward contract: 7000000 a *note the case.pg 3 has 7million 0.93499 b 6544930 a*b Call Option: 7500000 7013475 0.93513 7500000 5925000 0.79 7500000 6300000 0.84 No Action: a b a*b 1 7.5 7.5 0.9 7.5 6.75 1.1 7.5 8.25 Option 1- forward contract Option 2- Call Option
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8-9 NAL= Investment - PV (after-tax lease payment) - PVCCATS-PV (salvage) pg. 870 After-tax: % borrow 0.09 Times 1-Tax rate 0.64 (1-.36) 0.0576 PVCCATS: System Cost 9,400,000 CCA rate 0.25 Wildcat tax rate 0.36 846,000 0.3076 2,750,325.10 1.0288 1.0576 0.97 2,675,429.71 a Salvage 975,000 0.09 *.25x.36 0.3076 87,750.00 1 285,273.08 1.000000634 0.999999366 285,272.90 b 2,390,156.81 a-b Therefore, Wildcat's NAL would be: NAL= Investment - PV (after-tax lease payment) - PVCCATS-PV (salvage) pg. 870 9400000 less 1,376,000 8,024,000.00 0.0603648 2,675,429.71 2,619,269.71 975,000 4.57 6,511,167.83 - 6,724,570.29 PVCCATS: System Cost 9400000 CCA rate 0.25 Wildcat tax rate 0.36 846,000.00 0.3076 2,750,325.10 1.0288 1.0576 0.9727685325 System lease
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