RST Entered into a Direct Financing Lease Agreement, Which Required

question 208

Multiple Choice

RST entered into a direct financing lease agreement, which required rentals of $9,600, each year-end.The lease term was for ten years and a 14 percent rate of return is expected by RST.The cost of the machine for RST was (rounded to the nearest dollar) :

• A)$82,560
• B)$96,000
• C)$109,440
• D)$50,075

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Definitions:

Miller-Orr Model

A financial model used to manage cash balances and optimize the level of cash holdings by setting upper and lower limits within which the balance can fluctuate before triggering a transfer of funds.

Cash Balance

The amount of cash a company has on hand, which includes currency, coins, and balances in checking and savings accounts.

Low Cash Balance

A situation where an individual or organization has a minimal amount of cash on hand, potentially affecting their ability to cover short-term liabilities.

BAT Model

Stands for the Biodiversity Assessment Tool, a method used to evaluate or predict the impacts of development projects on biodiversity.