Leigh Fibers Wishes to Lease an Automated Knitting Machine Valued

question 33

Multiple Choice

Leigh Fibers wishes to lease an automated knitting machine valued at $420,000 from Ogden Capital for a period of 10 years.Ogden expects to depreciate the asset on a straight-line basis to a salvage value of $0.Actual salvage value is also expected to be $0 at the end of the 10-year period.If Ogden requires a 15% after-tax rate of return on the lease, what is the lease payment required from Leigh Fiber? Assume that the lease payments will be made at the beginning of each year and that the marginal tax rate is 40%.

• A)$111,470
• B)$145,395
• C)$96,930
• D)$58,158

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Definitions:

Taft-Hartley Amendments

A federal legislation from 1947 that limited the functions and authority of labor unions within the United States.

National Health

A conceptual focus on the health and wellbeing of a nation's population, often relating to public health policies and systems.

Sole Authority

The exclusive power or right to decide, act, or control a particular situation or organization, without needing approval or consent from others.

Landrum-Griffin Act

A U.S. federal law enacted in 1959 to regulate labor unions' internal affairs and their officials' relationships with employers.