Your fiRm Is Considering Leasing a New Robotic Milling Control

question 29

Multiple Choice

Your firm is considering leasing a new robotic milling control system.The lease lasts for 5 years.The lease calls for 6 payments of £300,000 per year with the first payment occurring at lease inception.
The black box would cost £1,050,000 to buy and would be straight-line depreciated to a zero salvage.
The actual salvage value is zero.The firm can borrow at 8%, and the corporate tax rate is 34%.
What is the maximum lease payment that you would be willing to make?

• A)£170,655
• B)£175,000
• C)£187,842
• D)£210,307
• E)None of the above.

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Definitions:

Secondary Bronchus

Branches of the primary bronchi that lead into each lobe of the lungs, playing a key role in the conductance of air to the lung tissues.

Primary Bronchus

The main passageway into the lungs, branching from the trachea to convey air into each lung.

Larynx

The voice box located in the throat, responsible for producing sound, protecting the trachea during swallowing, and regulating airflow.