Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. your firm is considering leasing a new computer. t

Your firm is considering leasing a new computer. The lease lasts for 9 years. The lease...

60.1K

Verified Solution

Question

Finance

Your firm is considering leasing a new computer. The lease lastsfor 9 years. The lease calls for 10 payments of $1,000 per yearwith the first payment occurring immediately. The computer wouldcost $7,650 to buy and would be straight-line depreciated to a zerosalvage value over 9 years. The actual salvage value is negligiblebecause of technological obsolescence. The firm can borrow at arate of 8%. The corporate tax rate is 30%.

What would the after-tax cash flow in year 9 be if the asset hada residual value of $500 (ignoring any possible riskdifferences)?

-$605

-$955

-$1,455

-$1,305

None of these

Answer & Explanation Solved by verified expert
3.7 Ratings (650 Votes)
Annual installments under buy borrow option Annual installments Cost 1 11rn r r 8 or 008 n 9 years Annual installments 7650 1 110089 008 Annual installments 7650 1 05003008 Annual installments 7650    See Answer
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
Become a Member

Transcribed Image Text

Your firm is considering leasing a new computer. The lease lastsfor 9 years. The lease calls for 10 payments of $1,000 per yearwith the first payment occurring immediately. The computer wouldcost $7,650 to buy and would be straight-line depreciated to a zerosalvage value over 9 years. The actual salvage value is negligiblebecause of technological obsolescence. The firm can borrow at arate of 8%. The corporate tax rate is 30%.What would the after-tax cash flow in year 9 be if the asset hada residual value of $500 (ignoring any possible riskdifferences)?-$605-$955-$1,455-$1,305None of these

Other questions asked by students

Q

To understand the concept of reactance (of an inductor) and its frequency dependence. When an inductor is...

Physics
Q

1 point Determine whether each of the relations whose digraphs are given below are reflexive...

Basic Math
Q

Choose the correct expression equal to sin x.A. sinx= ?1- cos xB. sinx= 1/1-...

Basic Math
Q

Conduct a review of the code of corporate governance of any multinational corporation in Oman....

Accounting
Q

On September 17, 2024, Ziltech, Incorporated, entered into an agreement to sell one...

Accounting
Q

Afurniture manufacturer specializes in wood tables. The tables sell for 100...

Accounting
Q

PLEASE SHOW THE LEDGERS FOR THE JOURNALS BELOW Journal Description Credit Post Ref....

Accounting
Q

With regard to ESG, the following fit into which categories? Level of GHG emissions environmental...

Finance
Q

Earnings per share Bass Ltd, a leading producer of construction, mining and electrical equipment, suffered...

Accounting
Q

REVISION QUESTION 4 a) What is the standard deviation of the returns on a stock...

Finance
Q

Listed below are steps of procuring materials for production: 1. The receiving clerk checks the...

Accounting
Q

Josie's individual monthly demand for Keurig K-Cups is given by P= 10 -0.2Q (or Q...

Finance