Contech (Lessee) Wishes to Lease a Printing Press Valued at $60,000

question 11

Multiple Choice

Contech (lessee) wishes to lease a printing press valued at $60,000 from Wrenn Capital (lessor) for a period of 4 years.Wrenn expects to depreciate the asset on a straight-line basis to a salvage value of $0.Actual salvage value is expected to be $8,000 at the end of 4 years.If Wrenn requires a 12 percent after-tax rate of return on the lease, what is the lessor's amount to be amortized? Assume Wrenn's marginal tax rate is 40%.

• A)$60,000
• B)$38,725
• C)$41,778
• D)$36,690

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Definitions:

Work Context

The physical and social environment in which work is performed, including conditions, culture, and external influences affecting the workforce.

Evaluation

The systematic assessment of processes, projects, or performances to determine their effectiveness, quality, or value.

Emotional Labor

The method of controlling emotions and expressions to meet a job's emotional demands.

Deep Acting

The process of managing one's emotions by consciously trying to feel the emotion one is required to display, as opposed to simply faking the external signs of the emotion.