Business, 11.02.2021 21:10 karenpazyuli

Kiddy Toy Corporation needs to acquire the use of a machine to be used in its manufacturing process. The machine needed is manufactured by Lollie Corp. The machine can be used for 10 years and then sold for $10,000 at the end of its useful life. Lollie has presented Kiddy with the following options: 1. Buy machine. The machine could be purchased for $180,000 in cash. All maintenance and insurance costs, which approximate $25,000 per year, would be paid by Kiddy.

2. Lease machine. The machine could be leased for a 10-year period for an annual lease payment of $45,000 with the first payment due immediately. All maintenance and insurance costs will be paid for by the Lollie Corp. and the machine will revert back to Lollie at the end of the 10-year period.

Required:
Assuming that a 10% interest rate properly reflects the time value of money in this situation and that all maintenance and insurance costs are paid at the end of each year, find the present value for the following options. Ignore income tax considerations. Determine which option Kiddy should choose.

PV
Buy option
Lease option
Kiddy should choose

Answers: 3

Show answers

Another question on Business

Business, 22.06.2019 10:30

Which analyst position analyzes information using mathematical models to business managers make decisions? -budget analyst -management analyst -credit analyst -operations research analyst

Answers: 1

Answer

Business, 22.06.2019 15:30

University hero is considering expanding operations beyond its healthy sandwiches. jim axelrod, vice president of marketing, would like to add a line of smoothies with a similar health emphasis. each smoothie would include two free health supplements such as vitamins, antioxidants, and protein. jim believes smoothie sales should fill the slow mid-afternoon period. adding the line of smoothies would require purchasing additional freezer space, machinery, and equipment. jim provides the following projections of net sales, net income, and average total assets in support of his proposal. sandwichesonly sandwiches and smoothies net sales $ 750,000 $ 1,350,000 net income 120,000 210,000 average total assets 350,000 750,000 return on assetschoose numerator ÷ choose denominator = return on assets÷ = return on assets÷ = profit margin÷ = profit margin÷ = asset turnover÷ = asset turnover÷ = times

Answers: 2

Answer

Business, 22.06.2019 22:00

What resourse is both renewable and inexpensive? gold coal lumber mineral

Answers: 1

Answer

Business, 23.06.2019 02:00

1. how much money did selfridge spend on advertising before the store’s opening? 2. explain what shopping was like in london during the early 1900s. how does this differ from the modern shopping experience? 3. what was the role of a floorwalker in 1900s london? 4. what inspired selfridge to ensure that customers in his store could browse at their leisure? do you need the links to the video?

Answers: 1

Answer

You know the right answer?

Kiddy Toy Corporation needs to acquire the use of a machine to be used in its manufacturing process....

Questions