Use of Financial Calculator TI BA II Plus Required

question 20

Multiple Choice

Use of Financial Calculator TI BA II Plus required. Marge wants to figure out the best (lowest financing cost) for the car of her dreams which costs $35,000. Which of the following offers should she choose?

• A)Lease A which requires a $1000 deposit, is for five years with monthly payments of $455. and the option to buy the lease out for $15 000 at the end of five years.
• B)Lease B which requires a $1000 deposit, is for three years with monthly payments of $455. and the option to buy the lease out for $20 000 at the end of three years.
• C)She should always take the option with the lowest monthly expense.
• D)Make a $5,000 deposit and take a five year loan with for $565 a month. The expected value of the car at the end of five years is $22,000.

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Definitions:

Direct Labor

Direct labor refers to the wages paid to workers directly involved in the manufacture of products or the provision of services.

Factory Overhead

All indirect costs related to manufacturing beyond direct materials and direct labor, including utilities, depreciation of factory equipment, and factory rent.

Process Cost System

An accounting method used to track cost related to processes or departments when mass-producing identical or similar products.

Work In Process Inventory

The value of partially completed goods or products that are in the process of being manufactured.