Problemyour firm is considering leasing a new photocopier, Ask an Expert

Accounting

Problem:

Your firm is considering leasing a new photocopier. The lease lasts for nine years. The lease calls for 10 payments of $1,000 per year with the first payment occurring immediately. The copier would cost $8,100 to buy and would be depreciated using the straight-line method to zero salvage over nine years. The firm can borrow at a rate of 8%. The corporate tax rate is 30%.

Requirement:

Question: What is the NPV of the lease?

Note: Provide support for rationale.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91167182

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