Use the Following Information to Answer the Question(s)below

question 41

Multiple Choice

Use the following information to answer the question(s) below.
Assume that it is 2012 and Rearden Metal is considering the purchase of a new blast furnace costing a total of $5 million.This furnace will qualify for accelerated depreciation: 20% can be expensed immediately,followed by 32%,19.2%,11.52%,11.52% and 5.76% over the next five years.However,because of Rearden's substantial tax loss carryforwards,Rearden estimates its marginal tax rate to be only 10% over the next five years.Since Rearden will get very little tax benefit from the depreciation expense,they consider leasing the furnace instead.Suppose that Rearden and the lessor face the same 8% borrowing rate,but the lessor has a 40% marginal tax rate.Assume that the furnace is worthless after five years,the lease term is five years,and a lease would qualify as a true tax lease.
-The lease rate for which the lessor will break even is closest to:

• A)$1,110,000.
• B)$1,130,000.
• C)$1,150,000.
• D)$1,160,000.

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Definitions:

Positive Symptoms

refer to the presence of abnormal behaviors or experiences, such as hallucinations or delusions, especially in the context of psychiatric illnesses.

Tardive Dyskinesia

A neurological syndrome caused by the long-term use of neuroleptic drugs, characterized by repetitive, involuntary, purposeless movements.

Dopamine Receptors

Proteins located on the surface of neurons that bind to the neurotransmitter dopamine and play a crucial role in brain function.

Antipsychotic Drugs

Medications used to manage psychosis, particularly in disorders like schizophrenia and bipolar disorder, by affecting brain chemistry.