Haystack, Inc

question 90

Multiple Choice

Haystack, Inc.manufactures machinery used in the mining industry.On January 2, 2016 it leased equipment with a cost of $200,000 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.If the selling price of the equipment is $325,000, and the rate implicit in the lease is 8%, what are the equal annual payments?

• A)$73,259
• B)$67,831
• C)$75,822
• D)$81,398

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Definitions:

Commodity X

A placeholder term for any generic good or service in economic discussions or models.

Commodity Y

A generic term for any tradable good or material product that is interchangeable with other goods of the same type.

Utility Function

It's a mathematical representation of how a consumer's preferences over a set of goods and services translates into a level of satisfaction or utility.

Price of X

The cost at which a specific item or commodity, denoted as "X," is sold in the market.