Use the Table for the Question(s)below

question 27

Multiple Choice

Use the table for the question(s) below.
Danby Construction is considering leasing a new crane for the next 5 years.Danby has created the following table of cash flows to help with the decision:

-If Danby's borrowing cost is 7%,and its tax rate is 35%,what is the NPV of leasing versus borrowing?

• A)$96,747
• B)$369,671
• C)$348,253
• D)-$363,441
• E)$75,329

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Definitions:

Depreciation

Depreciation is the systematic allocation of the cost of a tangible asset over its useful life, representing how much of an asset's value has been used up over time.

Operating Activities Section

This section of a financial statement details the revenues and expenses directly related to the core business operations.

Mortgage

A type of loan secured by real property, typically used to purchase property or which existing property owners use to raise funds.

Financing Activities

Financing activities are transactions related to raising capital and repaying borrowed funds, such as issuing stocks or bonds, and are reported in the cash flow statement.