Your fiRm Is Considering Either Leasing or Buying Some New

question 210

Multiple Choice

Your firm is considering either leasing or buying some new equipment. The lessor will charge $17,500 a year for 3 years should you decide to lease. The purchase price is $61,000. The
Equipment has a 3-year life after which it is expected to have a resale value of $13,000. Your firm
Uses straight-line depreciation, borrows money at 9 percent, and has a 34 percent tax rate. What is
The after-tax salvage value of the equipment?

• A) $8,580
• B) $9,701
• C) $11,407
• D) $18,529
• E) $19,697

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Definitions:

Individuals

Single organisms of a particular species, considered separately from their population or community.

Species

A group of organisms sharing common characteristics and genetic makeup, capable of interbreeding and producing fertile offspring under natural conditions.

Basic Unit

The fundamental component or element from which a system is built or organized.

Life

The condition that distinguishes organisms from inorganic objects and dead entities, characterized by growth, reproduction, and the need for food and energy.