Northern Lights Is Trying to Decide Whether to Lease or Buy

question 3

Multiple Choice

Northern Lights is trying to decide whether to lease or buy some new equipment. The equipment costs $51,000, has a 5-year life, and will be worthless after the 5 years. The company has a tax rate of 34 percent, a cost of borrowed funds of 8.75 percent, and uses straight-line depreciation. The equipment can be leased for $14,100 a year. What is the amount of the annual depreciation tax shield?

• A)$3,468
• B)$5,878
• C)$6,936
• D)$8,407
• E)$10,200

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Definitions:

Cultural Variability

The range of differences in cultural practices, norms, and values among different societies or social groups.

Intercultural Adjustment

The process of mentally and emotionally adapting to a culture different from one’s own.

Cultural Intelligence

The capability to function effectively in culturally diverse settings, understanding and adapting to cultural differences.

Quality Circles

Small groups of employees who voluntarily meet regularly to identify and solve work-related problems.