Use the Information for the Question(s) Below

question 23

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.
-The monthly lease payments for a four year lease of the Bulldozer are closest to ________.

• A) $1,870
• B) $1,825
• C) $1,750
• D) $2,115

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Definitions:

Credible

Worthy of trust or belief; convincing due to being based on evidence or sound reasoning.

Fully Understood

Completely comprehended or grasped in terms of significance, implications, or complexity.

Mediation

A process whereby a neutral party tries to help conflicting parties improve communication to resolve their dispute.

Neutral

Not siding with any party in a disagreement or dispute, showing no strong feelings or opinions on a particular topic.