1. Delamont Transport Company (DTC) is evaluating the merits of leasing versus purchasing a truck with a 4-year life that costs $40,000 and falls into the MACRS 3-year class. If the firm borrows and buys the truck, the loan rate would be 10%. The lease terms, which include maintenance, call for a $10,000 lease payment (4 payments total) at the beginning of each year. DTC's tax rate is 40%. What is the present value of the cost of leasing?
a. $20,791
b. $24,000
c. $20,921
d. $22,038
2. Ashes Divide Corporation has bonds on the market with 16 years to maturity, a YTM of 9.6 percent, and a current price of $1,306.50. The bonds make semiannual payments. What must the coupon rate be on these bonds? (Do not round your intermediate calculations.)
20.55%
10.25%
26.85%
13.49%
13.39%
3. How do IRR and NPV determine whether we should invest in the project?
4. Pick a public traded company and which industry the company operates in and on which market they are traded.