The Leasing Decision

The Leasing Decision Craxton Engineering will either purchase or lease a new $756,000 fabricator. If purchased, the fabricator will be depreciated on a straight-line basis over seven years. Craxton can lease the fab- ricator for $130,000 per year for seven years. Craxton’s tax rate is 35%. (Assume the fabricator has no residual value at the […]

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(a) (i) Discuss the theories, or arguments

(a) (i) Discuss the theories, or arguments (a) (i) Discuss the theories, or arguments, which suggest that financial analysis can be used to forecast the probability of a given firm’s failure; and (ii) explain why such an analysis, even if properly applied, may not always predict failure. (b) Discuss the following statement: ‘It is always […]

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De t e r mining F r ee Cash Fl o w and NPV

De t e r mining F r ee Cash Fl o w and NPV Cellular Access, Inc. is a cellular telephone service provider that reported net income of $250 million for the most recent fiscal year. The firm had depreciation expenses of $100 million, capital expenditures of $200 million, and no interest expenses. Working capital […]

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Unida Systems has 40 million shares

Unida Systems has 40 million shares Unida Systems has 40 million shares outstanding trading for $10 per share. In addition, Unida has $100 million in outstanding debt. Suppose Unida’s equity cost of capital is 15%, its debt cost of capital is 8%, and the corporate tax rate is 40%. a. What is Unida’s unlevered cost […]

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