What Is the Present Value of an Operating Lease That

question 82

Multiple Choice

What is the present value of an operating lease that involves payments of $8,000 per year (the end of the year) for 5 years with no possibility of purchase at the end of the lease term.Assume that the firm is in the 35% marginal tax rate and the pre-tax cost of debt for the firm is 7%?

• A) $32,801.58
• B) $22,796.11
• C) $21,321.03
• D) $35,070.93

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