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:

Group Prototypicality

The extent to which a member of a group represents the average or typical attributes, behaviors, or characteristics of that group.

Social Loafing

A scenario where members of a team contribute less effort to reach a target than they would if working individually.

Task Attractiveness

The degree to which an individual is drawn to or motivated by a specific task, often influenced by the nature of the task itself and the individual's personal interests.

Normative Discontinuities

Breaks or interruptions in the normative expectations or behaviors within a society or group.