Ajax Capital Has Determined the Amount to Be Amortized on an Extruder

question 13

Multiple Choice

Ajax Capital has determined the amount to be amortized on an extruder is $540,000. If the required rate of return is 14%, what will be the total interest received over the life of the lease given that lease payments will be made at the beginning of each of the 7 years of the lease agreement? Assume a marginal tax rate of 40%.

• A) $233,269
• B) $748,784
• C) $811,080
• D) $110,467

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Definitions:

Recorded Equity

The total amount of owners' equity recorded in the financial statements, representing the residual interest in the assets of a company after deducting liabilities.