What Is the Present Value of an Operating Lease That

question 76

Multiple Choice

What is the present value of an operating lease that involves payments of $25,000 per year (the end of the year) for 10 years with no possibility of purchase at the end of the lease term.Assume that the firm is in the 40% marginal tax rate and the pre-tax cost of debt for the firm is 10%?

• A) $184,002.18
• B) $92,168.51
• C) $110,401.31
• D) $153,614.18

---

Definitions:

Political Climate

The general mood, attitudes, and opinions on political matters within a specific geographical area or population at a given time.

South

Often refers to the southern region of the United States, known for its unique cultural, historical, and socio-economic characteristics.

World War II

A global conflict that lasted from 1939 to 1945, involving most of the world's nations, including all of the great powers, organized into two opposing military alliances: the Allies and the Axis.

Dixiecrats

Lower South delegates who walked out of the 1948 Democratic national convention in protest of the party’s support for civil rights legislation and later formed the States’ Rights Democratic (Dixiecrat) Party, which nominated Strom Thurmond of South Carolina for president.