Alpha Geek

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  • bachelor in business administration
    Polytechnic State University Sanluis
    Jan-2006 - Nov-2010

  • CPA
    Polytechnic State University
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Category > Accounting Posted 29 May 2017 My Price 7.00

Your firm needs a machine which costs $500,000

1. Suppose your firm is seeking a 3-year, amortizing $200,000 loan with annual payments and your bank is offering you the choice between a $207,000 loan with a $7,000 compensating balance and a $200,000 loan without a compensating balance. If the interest rate on the $200,000 loan is 12 percent, how low would the interest rate on the loan with the compensating balance have to be in order for you to choose it?

 

 

2. Your firm needs a machine which costs $500,000, and requires $10,000 in maintenance for each year of its 3 year life. After 3 years, this machine will be replaced. The machine falls into the MACRS 3-year class life category. Assume a tax rate of 35% and a discount rate of 15%. If this machine can be sold for $40,000 at the end of year 3, what is the after tax salvage value?

 

Answers

Alpha Geek
(8)
Status NEW Posted 29 May 2017 11:05 AM My Price 7.00

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file 1496056922-Answer.docx preview (217 words )
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