The Round Top Is Contemplating the Acquisition of Some New

question 227

Multiple Choice

The Round Top is contemplating the acquisition of some new tents. The purchase price is $156,000. The CCA represents 33.33 percent, 44.44 percent, 14.82 percent, and 7.41 percent of the value over
Years 1 to 4, respectively. The tents will be worthless after four years. The tents can be leased for
Four years at $40,500 a year. The firm can borrow money at 8.5 percent and has a 35 percent tax
Rate. What is the net advantage to leasing?

• A) $14,107
• B) $14,470
• C) $14,596
• D) $15,211
• E) $15,407

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Definitions:

Colorblind

An inability or decreased ability to see color, or perceive color differences, under normal lighting conditions.

Accommodation

The ability of the eye to change its focus from distant to near objects (and vice versa) by changing the curvature of the lens.

Suspensory Ligaments

Fibrous tissues that support an organ or structure, for example, holding the lens of the eye in place.

Spherical

Having the shape or form of a sphere, meaning it is perfectly round in all directions.