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

question 44

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 return on the lease, what is the lease payment that Wrenn will require from Contech? Assume a marginal tax rate of 40%.Under the terms of the lease, payments will be made at the beginning of each of the 4 years.

• A)$11,385
• B)$28,463
• C)$18,975
• D)$21,252

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Definitions:

Report Design View

A feature in database applications that allows users to create and modify report layouts in a design interface.

Field List

A component or pane within database and spreadsheet software that displays all the fields available for a given table or query.

Report Design View

A feature in database software that allows users to visually construct and modify the layout and elements of a report before printing or displaying it.

Property Sheet

A tool within software applications that allows users to view and edit properties of selected objects or elements, such as controls or fields in a database.