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Aztec College needs a new computer. It can either buy it for $250,000 or lease it...

Aztec College needs a new computer. It can either buy it for $250,000 or lease it from Macrolease company. The lease terms require Aztec to make six annual payments (prepaid) of $62,000. Macrolease needs to pay six annual maintenance costs (prepaid) of $10,000. Macrolease pays tax at 40%. Macrolease can depreciate the computer for tax purposes over 5 years starting from year 1. The computer will have a residual value of $50,000 at the end year 5. Macrolease’s before tax cost of capital is 8%. For depreciation, Macrolease adopts MACRS method. Hint; please use after tax cost of capital.

*. Depreciation schedule for 5 years under MACRS (IRS required): 20%, 32%, 19.2%, 11.52%, 11.52%, 5.76% .

What is the NPV of lease for Macrolease ?

A.

$96,540
B.

$83,467
C.

-$108,321
D.

$28,880
E.

$52,346
F.

$-$36,408
G.

$120,430
H.

$273,521
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