A Machine That Costs $280,000 Would Be Depreciated Using the Straightline

question 53

Multiple Choice

A machine that costs $280,000 would be depreciated using the straightline method by a leasing firm over a period of 3 years.Both the book value and the market value would be zero at the end of the 3 years.Both the lessor and the lessee have a tax rate of 21 percent.What is the NPV of the lease relative to the purchase to the lessor if the applicable pretax cost of borrowing is 7 percent and the lease payments are set at $102,100 annually for 3 years?

• A)−$1,025.58
• B)−$9,658.92
• C)$411.67
• D)$882.09
• E)$0