Your Firm Is Considering Leasing a New Computer

question 33

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 NPV of the lease?

• A) $1039.78
• B) $6,610.22
• C) -$339.78
• D) -$360.22

---

Definitions:

Adrenal Glands

A pair of endocrine glands that release hormones that prepare the body for emergencies and stressful situations and also release corticoids and small amounts of the sex hormones.

Pituitary Gland

The endocrine gland located in the brain that releases hormones that activate other endocrine glands as well as growth hormone; often called the “master gland.”

General Adaptation Syndrome (GAS)

A theoretical model describing the body's short-term and long-term reactions to stress.

Selye's GAS

General Adaptation Syndrome, a theory introduced by Hans Selye, describing the body's short-term and long-term reactions to stress.