What Is the Present Value of an Operating Lease That

question 26

Multiple Choice

What is the present value of an operating lease that involves payments of $12,000 per year (the end of the year) for 14 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 9%?

• A) $73,179.04
• B) $93,433.80
• C) $60,731.97
• D) $112,583.13

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