Your firm is considering leasing a new robotic milling control system. The lease lasts for 5 years. The lease calls for 6 payments of $300,000 per year with the first payment occurring at lease inception. The system would cost $1,050,000 to buy and would be straight-line depreciated to a zero salvage value. The actual salvage value is zero. The firm can borrow at 8%, and the corporate tax rate is 34%.
-What is the after-tax cash flow from leasing in year 0?
A)$300,000
B)$495,000
C)$852,000
D)$948,000
E)None of the above

Question

Quizplus · Accepted Answer

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 $300,000 per year with the first payment occurring at lease inception. The system would cost $1,050,000 to buy and would be straight-line depreciated to a zero salvage value. The actual salvage value is zero. The firm can borrow at 8%, and the corporate tax rate is 34%.
-What is the after-tax cash flow from leasing in year 0?
A)$300,000
B)$495,000
C)$852,000
D)$948,000
E)None of the above

Your Firm Is Considering Leasing a New Robotic Milling Control