Equipment with a Fair Value of $625,000 and Zero Residual

question 150

Multiple Choice

Equipment with a fair value of $625,000 and zero residual value is to be leased through annual lease payments made at the start of each year over 10 years. If interest is 6% compounded quarterly, determine the value of the annual lease payments.

• A) $53,385.45
• B) $58,478.56
• C) $62,500.00
• D) $80,000.06
• E) $80,525.57

---

Definitions:

Total Utility

The overall satisfaction or happiness a consumer derives from consuming a certain quantity of goods and services.

Marginal Utility

The extra benefit or utility gained from acquiring or consuming an additional unit of a product or service.

Utility Per Dollar

The amount of satisfaction or usefulness gained per unit of currency spent, used to measure consumer value.

Marginal Utility

Marginal utility is the change in total satisfaction or utility that a consumer experiences from consuming an additional unit of a good or service.