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

  1. 👍
  2. 👎
  3. 👁
  1. enter "=PMT(10%,5,6000,0)" into excel withough quatation, or using a financial calculator would be fine. The answer would be the loan payment. subtract this from the lease payment you get 207 thousand and something

    1. 👍
    2. 👎
  2. 62,025

    1. 👍
    2. 👎

Respond to this Question

First Name

Your Response

Similar Questions

  1. Math

    The total (after-tax) cost of a laptop computer is $1278.24. The local sales tax rate is 7.6%. What is the retail (pre-tax) price ?

  2. economics

    Suppose the income tax rate schedule is 0 percent on the first $10,000; 10 percent on the next $20,000; 20 percent on the next $20,000; 30 percent on the next $20,000; and 40 percent on any income over $70,000. Family A earns

  3. accounting please help

    Phil Phoenix is paid monthly. For the month of January of the current year, he earned a total of $8,288. The FICA tax rate for social security is 6.2% and the FICA tax rate for Medicare is 1.45%. The FUTA tax rate is 0.8%, and the

  4. finance 2 questions

    9. When Patricia sells her General Motors common stock at the same time that Brian purchases the same amount of General Motor's stock, General Motors receives: A. The spread between the bid and ask of the transaction B. The dollar

  1. accounts

    Part 1 During 2010, Raines Umbrella Corp. had sales of $850,000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $610,000, $110,000 and $140,000, respectively. In addition, the company has

  2. Micro-Economics

    Suppose that the government imposes a tax on heating oil. 1. Would the deadweight loss from this tax likely be greater in the first year after it is imposed or in the fifth year? 2. Would the revenue collected from this tax likely

  3. college accounting

    For its fiscal year ending October 31, 2010, Molini Corporation reports the following partial data. Income before income taxes $540,000 Income tax expense (30% $390,000) 117,000 Income before extraordinary items 423,000

  4. Healthcare Finance

    A firm that owns the stock of another corporation does not have to pay taxes on the entire amount of dividends received. In general, only 30 percent of the dividends received by one corporation from another are taxable. The reason

  1. Finance

    Kim Davis is in the 40% personal tax bracket. She is considering investing in HCA (taxable) bonds that carry a 12% interest rate. a. What is her after-tax yield (interest rate) on the bonds? b. Suppose Twin Cities Memorial has

  2. math

    mike went to the bakery and bought eatable worth 25$, out of which 30 cents went on sales tax on taxable purchases. if the tax rate was 6%, then what was the cost of the tax free items?


    FAX machine purchased for 464.40 including tax. Tax rate is 8%. What is original price? Is the answer 427.25? Text book purchased for 158.60 including tax. Tax rate is 9% What is the original price? Is the answer 412.98?

  4. finance

    The corporation earns $3 per share before taxes. once it has paid taxes,it will distribute the rest of its earnings to you as a dividend.The corporate tax rate is 35%,and the personal tax rate on income is 20%. How much is left

You can view more similar questions or ask a new question.