Question
Your firm is considering leasing a new robotic milling control system. The lease lasts for 5 years. The lease calls for 6 payments of $300,000
Your firm is considering leasing a new robotic milling control system. The lease lasts for 5 years. The lease calls for 6 payments of $300,000 per year with the first payment occurring at lease inception. The equipment would cost $1,050,000 to buy and would be straight-line depreciated to a zero book value over its 5-year life. The salvage value will be zero as well. The firm can borrow at 8%, its WACC is 12%, and the corporate tax rate is 34%.
What is the NPV of the lease (Net Advantage of Leasing)?
| A. | $-305,388 | |
| B. | $-223,636 | |
| C. | $-290,072 | |
| D. | $-156,128 | |
| E. | $-391,699 |
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Business Ethics A Stakeholder And Issues Management Approach
Authors: Joseph W. Weiss
7th Edition
1523091541, 978-1523091546
