Your Firm Is Considering Leasing a New Computer

question 31

Multiple Choice

Your firm is considering leasing a new computer. The lease lasts for 9 years. The lease calls for 10 payments of $1,000 per year with the first payment occurring immediately. The computer would cost $8,100 to buy and would be depreciated using the straight-line method to zero salvage over 9 years. The firm can borrow at a rate of 8%. The corporate tax rate is
30%) What is the NPV of the lease?

• A) -$1039.78
• B) $6,610.22
• C) $686.00
• D) $360.00

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Definitions:

The Swing

A famous Rococo painting by Jean-Honoré Fragonard, depicting a young woman swinging while being watched by her lover, embodying the playful and sensual style of the period.

Rococo

An 18th-century artistic movement and style, originating in France, characterized by elaborate ornamentation, asymmetrical values, pastel color palette, and themes of love, nature, and light-heartedness.

Fragonard

Jean-Honoré Fragonard was a French painter whose works are emblematic of the Rococo style, known for its playful, sensuous expression.

Jean-Jacques Rousseau

A Genevan philosopher, writer, and composer of the 18th century, whose ideas influenced the Enlightenment across Europe, as well as aspects of the French Revolution.