Your Firm Is Considering Leasing a New Computer

question 3

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 value 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 relative to the purchase?

• A) -$1,039.78
• B) $339.78
• C) $360.22
• D) $6,610.22
• E) None of these.

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Definitions:

Stereotypes

Oversimplified generalizations about a group of people, often based on incorrect or incomplete information, leading to prejudiced attitudes.

Internship Offers

Proposals of temporary positions provided by organizations to gain practical experience in a particular field or profession, often as a part of academic training.

Problem Solving

The process of finding solutions to difficult or complex issues.

Major Change

Significant alterations in one's life or environment, such as career shifts, personal or family transitions.