Magna Charter has been asked to operate a Beaver bush plane for a mining company exploring north and west of Fort Liard. Magna will have a firm one-year contract with the mining company and expects that the contract will be renewed for the five-year duration of the exploration program. If the mining company renews at year 1, it will commit to use the plane for four more years. Magna Charter has the following choices: a. Buy the plane for $500,000.
b. Take a one-year operating lease for the plane.
c. The lease rate is $118,000, paid in advance.
d Arrange a five-year, noncancelable financial lease at a rate of $75,000 per year, paid in advance.

Lease payments will be of equal amounts each year, and due in advance at the beginning of each year. The plane falls in the 5-year class with respect to depreciation under the MACRS. Accordingly, the depreciation percentages are 20%, 32%, 19%, 12%, 11% and 6% respectively. The salvage value at the end of 7 years is estimated at $50,000. Magna’s pre-tax cost of debt is 10%. Magna has large tax-loss carry forwards; however, owing to AMT (Alternative Minimum Tax) provisions, its expected marginal tax rate is 20%. Stellar Leasing Co., on the other hand , is a highly profitable company and faces a marginal tax rate of 40%. Stellar can earn a pre-tax rate of return of 10% on investments of similar risk.

Requried:
a. Evaluate the lease from the point of view of both Magna and Stellar assuming that the lease payment is $180,500.
b. What is the range of lease payment that would acceptable from the Lessee and the Lessor’s view point?

This problem has been solved! see the answerchapter 19 problem #8. quality and financial control (connect, perform)part one: geometrica designs and builds domes and space frames for large buildings. while the company had developed quality standards over time to respond to different client problems and training needs, it lacked a unified quality system, and its global client base wanted assurance that geometrica met an established international standard for quality. which of the following was an appropriate step for this company to take? a) reform its accounting and financial reporting systems to comply with sarbanes-oxleyb) establish and document a quality management system to comply with iso 9000management at workyou are the new fleet manager at xpressship, a package delivery company. as your first project, your boss has asked that you to look into implementing an electronic monitoring system for the fleet of 2,000 trucks your company owns. a recent internal audit on maintenance and repair costs on the company’s vehicles revealed while maintenance was performed regularly on the trucks, mileage or use had not been taken into account. this resulted in approximately $20,000 of unneeded repairs. you know that telematics have been used by other companies with fleets of cars or trucks and it will allow your company to not only track mileage and use, but also part replacement needs, vehicle oil pressure, and drivers’ speed and real time location. tracking these items can reduce maintenance costs while improving efficiency. you find that a simple computer can be installed in each vehicle. when the drivers return at the end of the day, the telematics information from each vehicle will be uploaded to a master computer where a software program will generate a report with results on the variables you have selected.early one morning as you are getting a cup of coffee, a few drivers that have been with the company for many years approach you with some concerns. eldon, the most senior driver says, “i heard you’re installing some type of computer to track our driving. my buddy works over at parcel and post package delivery and he said they’ve got these computers, too. he said managers are writing people up and firing drivers for speeding or not wearing seat belts. are you going to do that to us, too? ”part two: as a manager, which of the following statements would be effective in maintaining a positive relationship with company drivers? check all that apply.a) at this time, xpressship will be using telematics to monitor maintenance and repair needs, not drivers’ motoring habitsb) although the company isn’t doing so now, when xpressship begins to monitor driver motoring habits, the company will encourage them to keep a separate daily log where they can document any unusual circumstancesc) while xpressship could monitor things like speed, location, and idle time, the company trusts their drivers and will not be using that data in disciplinary decisionsd) xpressship executives are happy with their technology and believe that implementation is ideal for your organization

Connors academy reported inventory in the 2017 year-end balance sheet, using the fifo method, as $154,000. in 2018, the company decided to change its inventory method to lifo. if the company had used the lifo method in 2017, the company estimates that ending inventory would have been in the range $130,000-$135,000. what adjustment would connors make for this change in inventory method?

Match the situations that will develop one's personality and those that won't peter is surrounded by friends who are always encouraging him jonathan always watches television when he wants to take a break from his books libby sets small targets for herself and strives to achieve them. the smiths indulge in an animated discussion on varied topics every evening after dinner. brook loves junk food and exercises once in a while. develops your personality develops doesn't develop your personality