If Your Firm Purchases a Machine Costing $2 Million, It

question 33

Multiple Choice

If your firm purchases a machine costing $2 million, it would depreciate that machine straight-line to zero over four years, after which time the machine would be worthless. Your firm has a tax rate of 23 percent and borrows funds at 6 percent before taxes. Your firm is also considering leasing this machine. How much would the lease payment have to be in order for both the lessor and your firm to be indifferent about leasing?

• A) $601,316
• B) $521,909
• C) $552,200
• D) $563,333
• E) $576,693

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Definitions:

Echolalia

The automatic and involuntary repetition of sounds or words spoken by others, often seen in individuals with autism spectrum disorder or other communication disorders.

Global Aphasia

A severe form of aphasia where the individual has extensive difficulties in both expressive and receptive language communication, often resulting from a stroke or brain injury.

Broca's Aphasia

A type of aphasia characterized by difficulty in producing speech but with relatively preserved comprehension.

Wernicke's Aphasia

A neurological disorder characterized by impaired comprehension and production of language, due to damage to the Wernicke's area of the brain.