Use the Table for the Question(s)below

question 9

Multiple Choice

Use the table for the question(s) below.
Danby Construction is considering leasing a new crane for the next 5 years.Danby has created the following table of cash flows to help with the decision:

-If Danby's borrowing cost is 9%,and its tax rate is 30%,what is the amount of the lease-equivalent loan for the crane?

• A)$156,032
• B)$175,382
• C)$308,968
• D)-$363,441
• E)$289,618

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Definitions:

Lease Liability

A financial obligation representing future lease payments owed by a lessee under a lease agreement.

Introductory Section

The initial part of a financial report or document that outlines its scope, purpose, and structure.

CAFR

Comprehensive Annual Financial Report, a detailed financial report used by governments to provide a complete overview of their financial status, including revenues, expenditures, and debt.

Capitalize

The process of recording an expenditure as an asset on the balance sheet, rather than an expense on the income statement, to spread the cost over the asset's useful life.