Larger downpayment or more profitable?
We leased a small business last year and generated about 0,000 in revenues. We also had about 7,000 in expenses. Much of the expenses was due to us buying new equipment, all of them one-time purchases. Otherwise, we would not have to report a loss. We need to go to a bank and make a loan to officially buy the business from the owner next February at the end of our two-year contract. My question is this: is it better to have a larger downpayment — say, half — or show a small profit the first year by not claiming all of the expenses on our federal taxes? If we write off all of our expenses we will have much more money to put toward the downpayment but the bank will see we operated at a loss. Won’t the bank realize most of the expenses were one-time, startup costs? We have no collateral to speak of so we are going to have to rely on a downpayment and credit, I guess. This year, our second year in business, we will not have the one-time, startup expenses and we should show a profit and no loss on our taxes. Won’t the bank take that into consideration?
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If there is a salvage value of $1,000? There is more?
Efren is considering buying some new equipment for his restaurant for ,000. However,
the restaurant supply store says they also lease equipment. The supply store will offer him
a five-year lease with no down payment, four annual lease payments of ,000 per year,
and a final payment of ,000. If Efren’s cost of capital is 8%, should he select the lease
or purchase option? If there is a salvage value of ,000 if he buys the equipment but no
salvage value with the lease option, will his decision change?
Not sure what im supposed to do here. Not looking just for theou did answer im want to know how you got to the answer. I’d rather understand then just having the answer given to me. Thank you..
To the person who just answered. I didn’t need that mumbo jumbo answer you just gave, not to be rude, but seriously. This is a question for an assignment and requires a mathematical response. Since we have been learning a lot offormulass ( and im not good even ok at excel) I don’t know what I was supposed to do to figure this one out. Formula that is. So if you are going to answer pleasedon’tt give stupid answers.
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