Your Firm Is Considering Leasing a New Robotic Milling Control

question 17

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 thousand per year with the first payment occurring at lease inception. The black box would cost $1050 thousand 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%. All answers are in thousands. What is the after-tax cash flow from leasing in year 0?

• A) -$300
• B) -$852
• C) -$948
• D) -$495

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Definitions:

Individual Differences

Variations or disparities among individuals in terms of traits, abilities, or characteristics.

Expectancy Model

A theory that suggests motivation is based on the expectation of desired outcomes and the value placed on those outcomes.

Motivated

Refers to being driven or encouraged to act or accomplish something due to either internal desires or external rewards.

Achieve

To successfully reach a desired or intended goal, often as a result of effort or skill.