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Airgas Corporation is considering leasing a new equipment. The lease lasts for 5 years. The lease...

Airgas Corporation is considering leasing a new equipment. The lease lasts for 5 years. The lease calls for 5 payments of $40,000 per year with the first payment occurring immediately. The equipment would cost $185,000 to buy and would be straight-line depreciated to a zero salvage value over 5 years. The actual salvage value is negligible because of technological obsolescence. The firm can borrow at a rate of 6%. The corporate tax rate is 25%. What is the NPV of the lease relative to the purchase?Â

$7,872.63

-$9,134.78

$6,766.94

-$8,239.16

$10,024.38

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