Your firm is considering leasing a new robotic milling control system. The lease lasts for 5 years. The lease calls for 6 payments of $300 thousand per year with the first payment occurring at lease inception. The black box would cost $1050 thousand to buy and would be straight-line depreciated to a zero salvage. The actual salvage value is zero. The firm can borrow at 8%, and the corporate tax rate is 34%. All answers are in thousands. What is the after-tax cash flow from leasing in year 0?
A) -$300
B) -$852
C) -$948
D) -$495

Question

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The Answer of Your firm is considering leasing a new robotic milling control system. The lease lasts for 5 years. The lease calls for 6 payments of $300 thousand per year with the first payment occurring at lease inception. The black box would cost $1050 thousand to buy and would be straight-line depreciated to a zero salvage. The actual salvage value is zero. The firm can borrow at 8%, and the corporate tax rate is 34%. All answers are in thousands. What is the after-tax cash flow from leasing in year 0?
A) -$300
B) -$852
C) -$948
D) -$495

Your Firm Is Considering Leasing a New Robotic Milling Control