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:

Stage of Change

Stage of change refers to a phase within the Transtheoretical Model of Behavior Change, which describes the process individuals go through in changing behavior, ranging from not considering change to maintaining new behavior.

Preparation Stage

A stage in the Transtheoretical Model of behavior change where individuals intend to take action to address a behavior within the near future.

Self-Efficacy

An individual's belief in their own ability to succeed in specific situations or accomplish a task.

Stages of Change

A model describing an individual's readiness to act on a new healthier behavior and used in various therapeutic settings for behavior change.