Boss Company Currently Leases a Delivery Van from Check Enterprises

question 44

Multiple Choice

Boss Company currently leases a delivery van from Check Enterprises for a fee of £250 per month plus £0.40 per mile. Management is evaluating the desirability of switching to a modern, fuel-efficient van, which can be leased from David, SA., for a fee of £600 per month plus £0.05 per mile. All operating costs and fuel are included in the rental fees. In general,

• A) a lease from David, SA., is economically preferable to a lease from Check Enterprises regardless of the monthly use.
• B) a lease from Check Enterprises is economically preferable below 1,000 miles per month.
• C) a lease from Check Enterprises is economically preferable to a lease from David, SA., regardless of the monthly use.
• D) a lease from Check Enterprises is economically preferable above 1,000 miles per month.