Your Firm Is Considering Leasing a New Photocopier

question 13

Multiple Choice

Your firm is considering leasing a new photocopier.The lease lasts for nine years.The lease calls for 10 payments of $1,000 per year with the first payment occurring immediately.The copier would cost $8,100 to buy and would be depreciated using the straight-line method to zero salvage over nine years.The firm can borrow at a rate of 8 percent.The corporate tax rate is 30 percent.What is the NPV of the lease?

• A)-$1,039.78
• B)$6,610.22
• C)$686
• D)$360