1. Your firm is considering leasing a radiographic x-ray machine. The lease lasts for 3 years. The lease calls for 4 pay

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1.
Your firm is considering leasing a radiographic x-ray machine.
The lease lasts for 3 years. The lease calls for 4 payments of
$25,000 per year with the first payment occurring immediately. The
computer would cost $140,000 to buy and would be straight-line
depreciated to a zero salvage value over 3 years. The actual
salvage value is negligible. The firm can borrow at a rate of 12%.
The corporate tax rate is 40%.
What is the after-tax cash flow from leasing relative to the
after-tax cash flow from purchasing in years 1-3?
Group of answer choices
-$1,500
-$15,000
-$33,667
None of the rest
-$2,750
2.
Your firm is considering leasing a new radiographic device. The
lease lasts for 3 years. The lease calls for 4 payments of $25,000
per year with the first payment occurring immediately. The computer
would cost $140,000 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 12%. The corporate tax rate is 40%.
What is the after-tax cash flow from leasing relative to the
after-tax cash flow from purchasing in years 1-3?
Group of answer choices
-$1,200
None of the rest
-$1,577
-$13,000
-$3,667