You Are the CFO of a Company

question 44

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 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