You Work for a Nuclear Research Laboratory That Is Contemplating

question 26

Multiple Choice

You work for a nuclear research laboratory that is contemplating leasing a diagnostic scanner (leasing is a very common practice with expensive,high-tech equipment) .The scanner costs $3.5 million and it would be depreciated straight-line to zero over 4 years.Because of radiation contamination,it will actually be completely valueless in 4 years.You can lease it for $875,000 per year for 4 years.Assume the tax rate is 33 percent.You can borrow at 10 percent before taxes.What is the net advantage to leasing from your company's standpoint?

• A)$468,216
• B)$491,319
• C)$516,007
• D)$530,468
• E)$541,747

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Definitions:

Repetitive Process

A series of actions or operations that are performed over and over again, usually in a manufacturing or production setting.

Process Chart

A visual representation of the steps involved in a process, showing the sequence of tasks and decisions needed to complete a task or process.

Process Map

A visual representation of the steps, events, and operations that comprise a business process, showing how items flow through various stages.

Schematic Diagram

illustrates the elements of a system using abstract, graphic symbols rather than realistic pictures, emphasizing connections and relationships.