The firm can borrow at a rate of 8 the corporate tax rate


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?

Request for Solution File

Ask an Expert for Answer!!
Finance Basics: The firm can borrow at a rate of 8 the corporate tax rate
Reference No:- TGS0612065

Expected delivery within 24 Hours