Use the Information for the Question(s) Below

question 32

Multiple Choice

Use the information for the question(s) below.
Suppose the purchase price of a bulldozer is $90,000, its residual value in four years is certain to be $15,000, and there is no risk that the lessee will default on the lease. Assume that capital markets are perfect and the risk-free interest rate is 6% APR with monthly compounding.
-Suppose that instead of leasing the bulldozer, the company is considering purchasing a bulldozer outright by borrowing the purchase price using a four-year annuity loan. The monthly loan payments for a four year loan to purchase the Bulldozer are closest to ________.

• A) $2,115
• B) $1,825
• C) $1,870
• D) $1,750

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Definitions:

Norming Stage

A phase in group development where members resolve conflicts and develop closer relationships and cohesion.

Hierarchical Organization

An organizational structure where entities are ranked one above the other according to authority or status.

Communication Tends

The manner or direction in which communication practices or preferences evolve or lean towards.

Workplace Teams

Groups of employees working together towards a common goal within an organizational setting.