Use the Information for the Question(s) Below

question 18

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 the bulldozer can be leased with a $1.00-out lease. The lease payments will be closest to ________.

• A) 2,114
• B) 1,825
• C) 2,030
• D) 2,103

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Definitions:

Pectoralis Major

A large muscle in the upper chest that aids in the movement of the shoulder and the arm.

Deltoid

A large, triangular muscle covering the shoulder joint that is responsible for lifting the arm and giving the shoulder its range of motion.

Triceps Brachii

A muscle of the upper arm, responsible for extension of the elbow joint.

Forearm

The region of the arm between the elbow and the wrist, comprising two bones: the radius and the ulna.