You Are the CFO of a Company

question 55

Multiple Choice

You are the CFO of a company.You are considering leasing photocopiers from the manufacturer instead of purchasing them for $200,000.You can borrow at after-tax interest of 9% and the corporate tax rate is 35%.The lease payment will be $50,000 for five years.At the end of the five years, the photocopiers will be worthless.Photocopiers are depreciated at 20% CCA rate.What is the NPV of the lease?

• A)$27,304
• B)$39,582
• C)$52,395
• D)$73,586

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Definitions:

Insurance Policy

A contract between an insurer and a policyholder, specifying the terms under which the insurer agrees to compensate the policyholder for specified losses or damages.

Door-to-Door

Door-to-door refers to a direct selling method where salespeople visit potential customers in their homes or offices to sell products or services.

Service Salesperson

A professional who specializes in selling intangible products, such as service contracts or subscriptions.

Tangible Goods

Physical items that can be seen, touched, and possessed, including things like electronics, clothing, and furniture.