Your Firm Is Considering Leasing a New Robotic Milling Control

question 34

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 system would cost $1,050,000 to buy and would be straight-line depreciated to a zero salvage value. 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

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Definitions:

Humor

In a medical context, one of the fluids historically believed to be responsible for human health and temperament; in a general sense, the quality of being amusing.

Manipulate Muscles

The practice of physically adjusting or massaging muscles to relieve tension, pain, or to improve mobility and function.

Soft Tissue

Parts of the body that include muscles, tendons, ligaments, fat, and other connective tissues not involving bone.

Massage

The manipulation of the body's soft tissues to relieve muscle tension, reduce stress, and promote overall health and well-being.