Wayne Technical Corporation Signed a Lease for $150,000 for Equipment

question 23

Multiple Choice

Wayne Technical Corporation signed a lease for $150,000 for equipment. The equipment has an estimated useful life of 7 years. This lease would be considered to be a capital lease if:

• A) the equipment is leased for 4 years.
• B) the present value of the lease payments equals $40,000.
• C) title to the equipment transfers to Wayne at the end of the lease term.
• D) the lease agreement allows Wayne to purchase the truck for $75,000 at the end of the lease.

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Definitions:

Total Utility

The complete satisfaction or pleasure a consumer derives from consuming a certain quantity of a good or service.

Marginal Utility

The extra pleasure a customer receives from using an additional unit of a product or service.

Donuts

A type of fried dough confection or dessert food, commonly shaped in a ring or filled, known for its sweet taste and various toppings.

Day

A period of 24 hours as a unit of time, representing the time it takes for the Earth to complete one rotation around its axis.