Question: Artisan's is considering leasing a new computer. The lease terms include five annual payments of $1,650 with the first payment occurring at the lease signing.

Artisan's is considering leasing a new computer. The lease terms include five annual payments of $1,650 with the first payment occurring at the lease signing. The computer would cost $8,500 to buy and would be depreciated straightline to a zero salvage value over 5 years. The firm can borrow at a rate of 7.5 percent and has a tax rate of 21 percent. What is the cash flow from leasing relative to purchasing in Year 0?

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