Firm can borrow at 8 and corporate tax rate is 34. what is, Ask an Expert

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1) Firm is considering leasing the new robotic milling control system. Lease lasts for five years. The lease calls for 6 payments of $300,000 per year with initial payment occurring at lease inception. System would cost $1,050,000 to buy and would be straight-line depreciated to the zero salvage value. Actual salvage value is zero. Firm can borrow at 8%, and corporate tax rate is 34%. What is the suitable discount rate for valuing the lease?

a) 2.72%
b) 5.28%
c) 8.00%
d) 12.12%
e) None of the above.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M914331

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