What is the present value of an operating lease that involves payments of $12,000 per year (the end of the year) for14 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

ANS:A