ABC INCEntered into a Direct Financing Lease with QRS to Rent

question 143

Multiple Choice

ABC INC.entered into a direct financing lease with QRS to rent a machine that cost $157,895.The lease term was for six years.The annual rentals are payable at the end of each year, and ABC INC.expects to earn a 14 percent rate of return.The required amount of the annual rentals is (rounded to the nearest dollar) :

• A)$30,000
• B)$40,604
• C)$46,288
• D)$36,600

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Definitions:

Unemployment

The situation where individuals who are capable of working and actively seeking work are unable to find employment.

Prices and Wages

Refers to the levels of remuneration for labor and the cost of goods and services in an economy, which can impact inflation and purchasing power.

Natural Rate

The rate of a quantity, such as unemployment or interest, that prevails when the economy is in a long-term equilibrium.

Classical Dichotomy

The theoretical separation of nominal and real variables in classical economics, suggesting that changes in the money supply only affect nominal variables.