Your Firm Is Considering Leasing a New Computer

question 26

Multiple Choice

Your firm is considering leasing a new computer. The lease lasts for 9 years. The lease calls for 10 payments of $1,000 per year with the first payment occurring immediately. The computer would cost $7,650 to buy and would be straight-line depreciated to a zero salvage value over 9 years. The actual salvage value is negligible because of technological obsolescence. The firm can borrow at a rate of 8%. The corporate tax rate is 30%.
-What is the NPV of the lease relative to the purchase?

• A)$-1,039.78
• B)$339.78
• C)$360.22
• D)$6,610.22
• E)None of the above

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Definitions:

Tuberculosis

An infectious disease caused by the bacterium Mycobacterium tuberculosis, primarily affecting the lungs but can spread to other organs.

MRSA Infection

An infection caused by methicillin-resistant Staphylococcus aureus, a type of bacteria that is resistant to many antibiotics, making it difficult to treat.

Bloodborne Pathogen

Microorganisms in human blood that can cause diseases, including viruses such as HIV and hepatitis.

Intact Skin

Skin that remains unbroken and healthy, effectively serving its function as a barrier against external harm.