11) A new robotic welder can be leased for 5 years with annual payments of he first payment occurring at lease inception. The system would cost $1,050,000 to buy and vould be depreciated straightline to a zero salvage value. The actual salvage value is zero. The irm can borrow at 8 percent and has a tax rate of 23 percent. What discount rate should be used or valuing the lease? A) 9.84 percent B) 19.72 percent C) 6.16 percent 8.00 percent D) E) 6.32 percent
11) A new robotic welder can be leased for 5 years with annual payments of he first payment occurring at lease inception. The system would cost $1,050,000 to buy and vould be depreciated straightline to a zero salvage value. The actual salvage value is zero. The irm can borrow at 8 percent and has a tax rate of 23 percent. What discount rate should be used or valuing the lease? A) 9.84 percent B) 19.72 percent C) 6.16 percent 8.00 percent D) E) 6.32 percent
Chapter19: Lease And Intermediate-term Financing
Section: Chapter Questions
Problem 2P
Related questions
Question
![11)
A new robotic welder can be leased for 5 years with annual payments of $300,000 with
the first payment occurring at lease inception. The system would cost $1,050,000 to buy and
would be depreciated straightline to a zero salvage value. The actual salvage value is zero. The
firm can borrow at 8 percent and has a tax rate of 23 percent. What discount rate should be used
for valuing the lease?
A) 9.84 percent
B) 19.72 percent
C) 6.16 percent
D) 8.00 percent
E) 6.32 percent](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ff5992356-bb9c-414b-a90f-0ba415941cf3%2Fd2a5a362-bba1-432e-ab4c-6883b7ceaf13%2Fcezva3d_processed.png&w=3840&q=75)
Transcribed Image Text:11)
A new robotic welder can be leased for 5 years with annual payments of $300,000 with
the first payment occurring at lease inception. The system would cost $1,050,000 to buy and
would be depreciated straightline to a zero salvage value. The actual salvage value is zero. The
firm can borrow at 8 percent and has a tax rate of 23 percent. What discount rate should be used
for valuing the lease?
A) 9.84 percent
B) 19.72 percent
C) 6.16 percent
D) 8.00 percent
E) 6.32 percent
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