Marschall's Is Trying to Decide Whether to Lease or Buy

question 12

Multiple Choice

Marschall's is trying to decide whether to lease or buy some new equipment. The equipment costs $62,000 and has a 4-year life. The equipment will be worthless after the 4 years and will have to be replaced. The company has a tax rate of 35 percent, a cost of borrowed funds of 9 percent. The equipment can be leased for $16,500 a year. What is the amount of the after-tax lease payment?

• A) $5,775
• B) $8,350
• C) $10,725
• D) $11,690
• E) $11,700

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Definitions:

Functionalism

A psychological school of thought focusing on how mental and behavioral processes function - how they enable the organism to adapt, survive, and flourish.

Structuralism

An early school of psychology that used introspection to explore the elemental structure of the human mind.

Edward Titchener

A British psychologist who founded structuralism, an early school of psychology that aimed to analyze the adult mind in terms of the simplest definable components and then to find the way in which these components fit together in complex forms.

Graduate School

A specialized institute offering advanced education and research opportunities, typically leading to master's or doctoral degrees.