Your fiRm Is Considering Leasing a New Computer

question 27

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 year
0?

• A)£-4,865
• B)£-700
• C)£6,950
• D)£7,650
• E)None of the above.

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Definitions:

Dilated Pupils

A condition where the pupils of the eyes become larger or wider than normal, which can be a response to low light conditions, excitement, or the influence of certain substances.

Heart Rate

The speed at which the heart beats, typically measured in beats per minute (bpm).

Fear

An unpleasant emotion or thought that arises when an individual perceives a threat, leading to a fight or flight response.

Facial-Feedback Hypothesis

The theory that facial movements can influence emotional experiences.