Your firm is considering leasing a new laser light. The lease lasts for 3 years. The lease calls for 4 payments of $10,000 per year with the first payment occurring immediately. The computer would cost $45,000 to buy and would be straight-line depreciated to a zero salvage value over 3 years. The actual salvage value is negligible because of technological obsolescence. The firm can borrow at a rate of 10%. The corporate tax rate is 35%.
-What is the after-tax cash flow from leasing relative to the after-tax cash flow from purchasing in year 0?
A)$-35,000
B)$-38,500
C)$35,000
D)$38,500
E)None of the above

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The Answer of  Your firm is considering leasing a new laser light. The lease lasts for 3 years. The lease calls for 4 payments of $10,000 per year with the first payment occurring immediately. The computer would cost $45,000 to buy and would be straight-line depreciated to a zero salvage value over 3 years. The actual salvage value is negligible because of technological obsolescence. The firm can borrow at a rate of 10%. The corporate tax rate is 35%.
-What is the after-tax cash flow from leasing relative to the after-tax cash flow from purchasing in year 0?
A)$-35,000
B)$-38,500
C)$35,000
D)$38,500
E)None of the above

Your Firm Is Considering Leasing a New Laser Light