Prime Care Has Approached the Leasing Department of First City

question 30

Multiple Choice

Prime Care has approached the leasing department of First City Bank to arrange lease financing for a $1.2 million CAT scanner. The economic life of the scanner is estimated to be 10 years. The estimated salvage value at the end of 10 years is $0. First City plans to depreciate the scanner on a straight-line basis over 10 years. If First City charges a beginning-of-the-year lease payment of $255,395, what after-tax rate of return will the bank earn on the lease? Assume a marginal tax rate of 40%.

• A) 4.7%
• B) 16.8%
• C) 13%
• D) 40%

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Definitions:

Role Management

The process of defining, assigning, and overseeing the functions and responsibilities within an organization or system.

Conformity Behaviour

The act of matching attitudes, beliefs, and behaviors to group norms or societal expectations.

Stages Of Socialization

The phases individuals go through as they learn to navigate and adapt to the social norms, values, and expectations of a particular group or society.

Socialization

The process by which individuals learn and adapt to the norms, values, behaviors, and social skills appropriate to their society or social group.