Your Firm Is Considering Leasing a New Robotic Milling Control

question 44

Multiple Choice

Your firm is considering leasing a new robotic milling control system. The lease lasts for 5 years. The lease calls for 6 payments of $300,000 per year with the first payment occurring at lease inception. The system would cost $1,050,000 to buy and would be straight-line depreciated to a zero salvage value. The actual salvage value is zero. The firm can borrow at 8%,and the corporate tax rate is 34%. What is the after-tax cash flow in years 1 through 5?

• A) -$126,600
• B) -$198,000
• C) -$269,400
• D) -$287,250
• E) None of these.

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Definitions:

Main Effect

The immediate effect that an independent variable has on a dependent variable within an experimental framework.

Simple Effect

Analysis within ANOVA that looks at the effect of one factor at a specific level of another factor, useful in interactions.

Interaction Effect

A phenomenon in which the effect of one independent variable on a dependent variable changes depending on the level of another independent variable.

Main Effect

In an experimental setup, the direct impact that an independent variable exerts on a dependent variable.