Assume That Penguin Co

question 126

Multiple Choice

Assume that Penguin Co. is considering disposing of equipment that cost $50,000 and has $40,000 of accumulated depreciation to date. Penguin Co. can sell the equipment through a broker for $25,000 less 5% commission. Alternatively, Teal Co. has offered to lease the equipment for five years for a total of $48,750. Penguin will incur repair, insurance, and property tax expenses estimated at $10,000. At lease-end, the equipment is expected to have no residual value. The net differential income from the lease alternative is:

• A) $15,000
• B) $ 5,000
• C) $25,000
• D) $12,500

---

Definitions:

President Barack Obama

The 44th President of the United States, serving from 2009 to 2017, known for being the first African American to hold the office and implementing policies like the Affordable Care Act.

Hostile Takeovers

Hostile takeovers occur when one company tries to acquire another without the consent or cooperation of the target company's management or board.

Targeted Share Repurchases

Also known as greenmail, occurs when a company selectively buys back stock from a potential acquirer at a price that is higher than the market price. In return, the potential acquirer agrees not to attempt to take over the company.

Cumulative Voting

A voting system used in elections, where shareholders multiply the number of shares they own by the number of director positions available to get their total number of votes.