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?
e) None of the above.