Fireplaces and More Is Considering the Purchase of a Delivery

question 55

Multiple Choice

Fireplaces and More is considering the purchase of a delivery truck costing $29,000. The truck will be used for 5 years and then it will be worthless. The financing rate for the purchase is 7.5 percent and the corporate tax rate is 32 percent. The firm uses straight-line depreciation. What is the break-even lease payment amount?

• A)$7,148
• B)$7,318
• C)$7,546
• D)$8,038
• E)$8,254

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Definitions:

Journal Entry

A record in accounting that represents a transaction and its effects on accounts in a double-entry bookkeeping system.

NSF Check

A check that has been returned by the bank because the account on which it was drawn did not have sufficient funds.

Deposits In Transit

Funds that have been sent to a bank but not yet recorded in the bank's records, resulting in a discrepancy between the company's cash records and bank statement.

Bank Service Charge

A fee charged by a bank to a customer for account maintenance or other banking services.