Lance Is Trying to Decide Whether to Purchase a New

question 60

Multiple Choice

Lance is trying to decide whether to purchase a new bulldozer to expand his business. He is confident he has enough work to keep the bulldozer busy and that repaying the loan will not be a problem. What advice would you give Lance?

• A) If the interest rate on the loan is less than the return on this asset, buy.
• B) If the return on this asset is more than the return on his equity, don't buy.
• C) If his current return on equity is greater than the return on this asset, buy.
• D) If his total asset turnover rate is greater than one, don't buy.

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Definitions:

Geologic Events

Significant occurrences in the Earth's history that have shaped its surface and structure, including volcanic eruptions, earthquakes, and glaciations.

Deposition

The geological process in which sediments, soil, and rocks are added to a landform or landmass due to the action of wind, water, or ice.

Metamorphic Rocks

Rocks that have been transformed from pre-existing rock types through heat, pressure, and/or chemically active fluids.

Granite

A hard, granular, intrusive igneous rock composed mainly of quartz, mica, and feldspar.