Steven's Auto Detailers Is Trying to Decide Whether to Lease

question 25

Multiple Choice

Steven's Auto Detailers is trying to decide whether to lease or buy some new equipment for polishing vehicles. The equipment costs $22,000, has a 3-year life, and will be worthless after the 3 years. The aftertax discount rate is 6.2 percent. The annual depreciation tax shield is $1,760 and the aftertax annual lease payment is $6,650. What is the net advantage to leasing?

• A)-$397.11
• B)-$248.16
• C)$184.92
• D)$315.40
• E)$462.84

---

Definitions:

Minorities

Groups of individuals differentiated from the majority in a given society or community based on characteristics such as race, religion, language, or political beliefs.

Glass Ceiling

An invisible barrier that prevents minorities and women from rising to the highest ranks of power or success within a corporation or organization, despite qualifications or achievements.

Workforce

The group of individuals engaged in work or available for work, either in a specific industry or in the labor market as a whole.

Diverse

Showing a great deal of variety; very different from each other.