Haystack, Inc

question 17

Multiple Choice

Haystack, Inc. manufactures machinery used in the mining industry. On January 2, 2015 it leased equipment with a cost of $320,000 to Silver Point Co. The 5-year lease calls for a 10% down payment and equal annual payments at the end of each year. The equipment has an expected useful life of 5 years. Silver Point's incremental borrowing rate is 10%, and it depreciates similar equipment using the double-declining balance method. The selling price of the equipment is $520,000, and the rate implicit in the lease is 8%, which is known to Silver Point Co. What is the amount of interest expense recorded by Silver Point Co. for the year ended December 31, 2015?

• A) $46,800
• B) $37,440
• C) $41,600
• D) $52,000

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Definitions:

Frequency

The number of wave peaks per second. In sound, frequency governs the perceived pitch of the sound.

Pitched

Used to describe a speech or proposal that has been presented to an audience with the intention of persuading them.

Amplitude

In signal processing, amplitude refers to the magnitude or intensity of a signal's fluctuation or variation, often measured in terms of the signal's peak value.

Loudness

A perceptual attribute of sounds that is primarily a physiological correlate of sound pressure level, measured in decibels.