Unilog Is Considering Leasing a Computer from UniNet Under a 6-Year

question 19

Multiple Choice

Unilog is considering leasing a computer from UniNet under a 6-year lease.The computer costs $200,000 and will be depreciated as a 5-year MACRS asset.The expected salvage value of the computer after 6 years is $20,000.UniNet's marginal tax rate is 35 percent and its average tax rate is 30%.UniNet requires a 13 percent after-tax rate of return on leases of this type.What annual, pretax, beginning-of-the-year lease payment must Unilog make to UniNet? (Problem requires MACRS depreciation tables.)

• A)$48,786
• B)$31,711
• C)$50,500
• D)$16,848

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Definitions:

Operational Planning

The process of planning short-term actions and strategies to achieve company goals and objectives.

Profit Objectives

Financial goals set by a business aiming to achieve a specific amount of profit over a certain period of time.

Short-Term

Relating to financial instruments or borrowing with a maturity of one year or less, or to activities or planning over a similar timeframe.

Profit Projections

Estimated calculations predicting the future profitability of a business over a specific period.