FINANCE- Sutton Corporation, which has a zero tax rate due to tax loss carry-forwards
Question # 00118828
Posted By:
Updated on: 10/17/2015 12:17 AM Due on: 11/16/2015
Sutton Corporation, which has a zero tax rate due to tax loss carry-forwards, is considering a 5-
year, $6,000,000 bank loan to finance service equipment. The loan has an interest rate of 10%
and would be amortized over 5 years, with 5 end-of-year payments. Sutton can also lease the
equipment for 5 end-of-year payments of $1,790,000 each. How much larger or smaller is the
bank loan payment than the lease payment? Note: Subtract the loan payment from the lease
payment.
year, $6,000,000 bank loan to finance service equipment. The loan has an interest rate of 10%
and would be amortized over 5 years, with 5 end-of-year payments. Sutton can also lease the
equipment for 5 end-of-year payments of $1,790,000 each. How much larger or smaller is the
bank loan payment than the lease payment? Note: Subtract the loan payment from the lease
payment.
-
Rating:
/5
Solution: FINANCE- Sutton Corporation, which has a zero tax rate due to tax loss carry-forwards