Use the Present Value and Future Value Tables Included in Appendix

question 40

Multiple Choice

Use the present value and future value tables included in Appendix 8 and on the textbook companion website.
-On January 1, Cromwell Corp. leased a mainframe computer from Fairview Company for $42,000 per year (payable on each December 31) for 10 years. The lease is a capital lease, and the current market rate of interest is 12 percent. The market value of the computer is $237,300, which is equal to its discounted present value at 12 percent. Given this data, interest expense on the lease for the first year is

• A) $42,000
• B) $28,476
• C) $25,200
• D) $13,524

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Definitions:

Sole Proprietorships

A business owned and operated by a single individual, where there is no legal distinction between the owner and the business entity.