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 black box would cost £1,050,000 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%.What is
The appropriate discount rate for valuing the lease?
A)2.72%
B)5.28%
C)8.00%
D)12.12%
E)None of the above.

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 £300,000 per year with the ﬁrst payment occurring at lease inception.
The black box would cost £1,050,000 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%.What is
The appropriate discount rate for valuing the lease?
A)2.72%
B)5.28%
C)8.00%
D)12.12%
E)None of the above.

Your ﬁRm Is Considering Leasing a New Robotic Milling Control