If Riverton purchases the equipment, what is the amount of the lease-equivalent loan?

Riverton Mining plans to purchase or lease $220,000 worth of excavation equipment. If purchased, the equipment will be depreciated for tax purposes on a straightline basis over five years, after which it will be worthless. If leased, the annual lease payments will be $55,000 per year for five years. Assume Riverton’s borrowing cost is 8%, its tax rate is 35%, and the lease qualifies as a true tax lease.

a. If Riverton purchases the equipment, what is the amount of the lease-equivalent loan?

b. Is Riverton better off leasing the equipment or financing the purchase using the lease-equivalent loan?

c. What is the effective after-tax lease borrowing rate? How does this compare to Riverton’s actual after-tax borrowing rate?

find the cost of your paper

Given the bank forward rates in part (a), were short-term interest rates higher or lower in Poland than in Canada? Explain

Your start-up company has negotiated a contract to provide a database installation for a manufacturing company in Poland. That firm has agreed to pay you 100,000 CAD in three-month’s time….

Plot your profits in one year from the contract as a function of the exchange rate in one year, for exchange rates from 0.75 CAD/EUR to 1.50CAD/EUR. Label this line “Unhedged Profits.”

You are a broker for frozen seafood products for Choice Products. You just signed a deal with a Belgian distributor. Under the terms of the contract, in one year you….

What is the present value of the 5 million EUR cash inflow computed by first discounting the EUR and then converting it into CAD?

You are a Canadian investor who is trying to calculate the present value of a 5 million EUR cash inflow that will occur one year in the future. The spot….