Your Firm Is Considering Leasing a New Computer

question 12

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 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 would the after-tax cash flow in year 9 be if the asset had a residual value of £500 (ignoring any possible risk differences) ?

• A)£-605
• B)£-955
• C)£-1,455
• D)£-1,305
• E)None of the above.

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Definitions:

Performance Differences

Performance differences refer to the disparities in outcomes or achievements between individuals or groups under study.

Between Groups

Refers to comparisons made across different groups or categories in an experiment or study.

Analysis of Variance

A statistical technique used to determine if there are any statistically significant differences between the means of three or more independent (unrelated) groups.

Well-being

A state or condition that encompasses physical, mental, and emotional health, often considered in terms of how individuals feel about their life and circumstances.