Randall Corp

question 96

Multiple Choice

Randall Corp. is trying to decide whether to lease or purchase a piece of equipment needed for the next five years. The equipment would cost $100,000 to purchase, and maintenance costs would be $10,000 per year. After five years, Randall estimates it could sell the equipment for $30,000. If Randall leases the equipment, it would pay $30,000 each year, which would include all maintenance costs. If the hurdle rate for Randall is 12%, Randall should:

• A) lease the equipment, as net present value of cost is about $11,000 less.
• B) buy the equipment, as net present value of cost is about $11,000 less.
• C) lease the equipment, as net present value of cost is about $30,000 less.
• D) buy the equipment, as net present value of cost is about $30,000 less.

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Definitions:

Follower Perception

The way in which subordinates view, understand, and interpret the actions, policies, and leadership styles of their superiors.

Transformation Behavior

Changes in behavior that significantly alter the existing manner of doing or being.

Individualized Consideration

A component of transformational leadership, focusing on the leader's attention to and support for the individual needs, abilities, and development of followers.

Inspirational Motivation

The ability to inspire and motivate others towards achieving a shared vision or goal.