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:

1710 cm^-1

This refers to the typical absorption band in infrared spectroscopy for carbonyl (C=O) stretching in aldehydes, ketones, and carboxylic acids.

IUPAC

The global organization responsible for developing standardized nomenclature in chemistry and related fields.

Oxobutanenitrile

An organic compound, also known as 3-oxobutanenitrile, characterized by a nitrile group attached to a ketone group in a four-carbon chain.

Compound Shown

A specific molecular structure or substance that is illustrated or referenced in a particular context or study.