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:

Fiduciary Duty

A legal obligation of one party to act in the best interest of another when entrusted with care of money, property, or secrets.

Limited Partner

A limited partner participates in a partnership with limited liability and typically does not participate in the day-to-day management of the business, contrasting with a general partner who has unlimited liability.

General Partners

Individuals in a partnership who are responsible for managing the business and are personally liable for its debts.

Distribution of Assets

The process of allocating a company's or an individual's assets among rightful claimants or heirs.