What Is the Present Value of an Operating Lease That

question 99

Multiple Choice

What is the present value of an operating lease that involves payments of $8,000 per year (at the end of each year) for 12 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 12%?

• A) $60,918.39
• B) $49,554.99
• C) $39,596.96
• D) $32,210.75

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