As part of its overall plant modernization and cost reduction program, the management of Teweles Textile Mills has decided to install a new automated…

As part of its overall plant modernization and cost reduction program, the management ofTeweles Textile Mills has decided to install a new automated weaving loom. In the capitalbudgeting analysis of this equipment, the IRR of the project was found to be 20 percentversus a project required return of 12 percent.The loom has an invoice price of $250,000, including delivery and installation charges. Thefunds needed could be borrowed from the bank through a four-year amortized loan at 10percent interest rate, with payments to be made at the end of each year. In the event thatthe loom is purchased, the manufacturer will contract and service it for a fee of $20,000 peryear at the end of each year. The loom will be depreciated over four years using the straightline method, with a salvage value of $42,500. And Teweles’s tax rate is 40 percent.Apilado Automation Inc., maker of the loom, has offered to lease the loom to Teweles for$70,000 upon delivery and installation (at t=0), plus four additional lease payments of$70,000 to be made at the ends of Years 1 through 4. The lease agreement includesmaintenance and servicing. Teweles plans to build an entirely new plant in four years, so ithas no interest in either leasing or owning the proposed loom for more than that period.(a). Should the loom be leased or purchased? Explain and show your work.

Calculate Your Essay Price
(550 words)

Approximate price: $22

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
The price is based on these factors:
Academic level
Number of pages
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more

Order your essay today and save 10% with the coupon code: best10