Ajax Capital Has Determined That the Amount to Be Amortized

question 46

Multiple Choice

Ajax Capital has determined that the amount to be amortized on an extruder is $540,000. What annual lease payment must Ajax (lessor) require from the lessee if the required rate of return is 16%? Assume that the lease payments will be made at the beginning of each of the 7 years of the lease agreement and that the marginal tax rate is 40%.

• A) $288,140
• B) $222,827
• C) $115,256
• D) $192,093

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Definitions:

Puzzle Box

An experimental device used in animal psychology to study trial-and-error learning, notably by Edward L. Thorndike.

Thorndike

Edward Thorndike was an influential psychologist known for his work in behaviorism and for developing the Law of Effect, which played a foundational role in the study of operant conditioning.

Skinner Box

An apparatus created by B.F. Skinner for conditioning and studying the behaviors of animals through reinforcements and punishments.

Insight Learning

A form of problem solving where the solution suddenly comes to us in what might be described as a "flash of insight".