The Mean Life of a Pair of Shoes Is 40

question 35

Multiple Choice

The mean life of a pair of shoes is 40 months with a standard deviation of 8 months.If the life of the shoes is normally distributed,how many pairs of shoes out of one million will need replacement before 36 months?

• A) 500,000
• B) 808,500
• C) 191,500
• D) 308,500

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Definitions:

After-Tax Lease Payments

Lease payments made by a business adjusted for the tax effects, reflecting the actual cash outflow for leasing after accounting for tax deductions.

NAL

Net Advantage to Leasing, which is a calculation to determine the financial benefits of leasing equipment versus purchasing it.

Synthetic Lease

A financing arrangement that classifies as an operating lease for accounting purposes but as a financing purchase for tax purposes, often used in real estate and equipment leases.

Tax-Oriented Lease

A leasing agreement structured to maximize tax benefits for the lessor, often by passing on tax advantages to the lessee in the form of lower lease payments.