Harrowfield Deliveries Has Decided to Lease a Delivery Van for the Next

question 52

Multiple Choice

Harrowfield Deliveries has decided to lease a delivery van for the next 5 years using a fixed price lease that allows them to buy the van for $18,000.The purchase price of the van is $67,000,and there is no risk that Harrowfield will default on the lease.If the risk-free rate is a 8% APR with monthly compounding,what would be the monthly lease payment for a 5-year lease in a perfect capital market?

• A)$1,106
• B)$1,114
• C)$1,059
• D)$1,041
• E)$1,052

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Definitions:

Unconscionability Rule

A legal principle that prevents the enforcement of contracts or terms that are unjust, excessively oppressive, or grossly unfair to one party.

Uniform Commercial Code

A comprehensive set of laws governing all commercial transactions in the United States, intended to harmonize laws across the states.

Sale of Goods

A commercial transaction in which a seller transfers ownership of tangible personal property to a buyer for a price.

Duress

Compulsion by threat or force, often used in legal contexts where a person's action is excused because it was performed under coercion.