Dallas Corp

question 69

Multiple Choice

Dallas 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, Dallas estimates it could sell the equipment for $30,000. If Dallas leased the equipment, it would pay a set annual fee that would include all maintenance costs. Dallas has determined after a net present value analysis that at its hurdle rate of 12% it would be better off by $11,000 if it leases the equipment. What would the approximate annual cost be if Dallas were to lease the equipment?

• A) $21,800
• B) $27,800
• C) $30,000
• D) $34,700

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Definitions:

Exposure and Response-Prevention Therapy

A form of cognitive-behavioral therapy primarily used to treat obsessive-compulsive disorder, involving exposure to feared situations and prevention of the subsequent compulsive response.

Obsessive-Compulsive Disorder

A mental health condition characterized by recurrent, unwanted thoughts (obsessions) and repetitive behaviors (compulsions).

Coulrophobia

An irrational fear of clowns, often resulting in anxiety and avoidance behaviors.

Behavioral Approach

A perspective in psychology which emphasizes the study of observable behaviors and the role of the environment as a determinant of behavior.