Your fiRm Is Considering Leasing a New Computer

question 24

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 would the after-tax cash flow in year 9 be if the asset had a residual value of £500 (ignoring any
Possible risk differences) ?

• A)£-605
• B)£-955
• C)£-1,455
• D)£-1,305
• E)None of the above.

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Definitions:

Adopted Children

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The concept that complex traits and behaviors are influenced by the interaction of numerous genetic factors.