Pluto, Inc

question 86

Multiple Choice

Pluto, Inc. is trying to decide whether to lease or buy some new equipment. The equipment costs $38,000, has a 3-year life and is worthless after the 3 years. The after-tax discount rate is 5 percent. The annual depreciation tax shield is $4,307 and the after-tax annual lease payment is $9,240. What is the net advantage to leasing?

• A) -$2,641
• B) -$1,337
• C) $1,108
• D) $1,333
• E) $3,427

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Definitions:

Reinforcement-Seeking Behavior

Actions specifically performed with the intention of obtaining reward or reinforcement.

Place Cells

Neurons in the hippocampus that become active when an animal is in or is thinking about a specific location.

Reward

An incentive or positive reinforcement that promotes a desired behavior by providing pleasure or satisfaction.