Your fiRm Is Considering Leasing a New Computer

question 35

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
£7,650 to buy and would be straight-line depreciated to a zero salvage over 9 years.The actual
Salvage value is negligible because of technological obsolescence.The firm can borrow at a rate of
8%) The corporate tax rate is 30%.
What is the after-tax cash flow from leasing relative to the after-tax cash flow from purchasing in years
1-9?

• A)£-255
• B)£-955
• C)£-1,295
• D)£-1,850
• E)None of the above.

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Definitions:

Carl Jung

An individual from Switzerland specializing in psychiatry and psychoanalysis who established analytical psychology, highlighting the essential role of one’s own psyche and the pursuit of personal integrity.

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In psychoanalytic theory, the hidden psychological meaning behind dreams.

Unconscious Desire

Motivations or wants that influence behavior without an individual's awareness, often discussed in the context of psychoanalytic theory.

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The hidden, underlying meaning of dreams or symbolic actions, as opposed to the overt storyline or manifest content.