Suppose That a 10-Year Lease Saves $200,000 Per Year in After-Tax

question 39

Multiple Choice

Suppose that a 10-year lease saves $200,000 per year in after-tax cash flows,compared to using a loan to purchase an asset.All else equal,and given a usable life of 10 years with no salvage value,what is the advantage of the lease given a discount rate of 7% (round to the nearest $100,000) ?

• A)$200,000
• B)$1,400,000
• C)$1,800,000
• D)$2,000,000

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Definitions:

Novelty Bias

The tendency of individuals to prefer novel objects or experiences over familiar ones.

Therapeutic Window

The range of drug dosages which can treat disease effectively while staying within the safety margin, minimizing the risk of side effects.

Therapeutic Alliance

The bond of confidence and mutual understanding established between therapist and client, which allows them to work together to solve the client’s problems.

Psychotherapy

A therapeutic treatment involving psychological techniques, used to help a person overcome psychological difficulties and disorders.