Your firm is considering leasing a magic box. The lease lasts for three years. The lease calls for three payments of $1,350 per year with the first payment occurring at lease inception. The magic box would cost $3,600 to buy and would be straight-line depreciated to zero salvage value over three years. The firm can borrow at 6 percent, and the marginal corporate tax rate is 21 percent. What is the NPV of the lease?

A. ?$65.75
B. ?$146.51
C. $30.50
D. ?$30.50


Answer: B

Business

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Which of the following statements is true about initial direct costs?

A) Initial direct costs should always be debited against income by the lessor in the period of the inception of the lease. B) Initial direct costs are ownership-type costs such as insurance, maintenance, and taxes. C) Initial direct costs of an operating lease should be recorded by the lessor as a prepaid asset. D) Initial direct costs of a sales-type lease should be expensed as incurred, and an equal amount of the unearned income should be recognized as income in the same period.

Business

Match the following definitions and terms.

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Business

On occasion, disgruntled former and current employees use various means to level criticism against, or create embarrassment, with regard to their former or current employer. Employers in turn will file law suits to stop the employee's communications. What effect do these employer lawsuits have?

Business

Worker's compensation costs have been declining since 2005 partly because of employer safety programs.

Answer the following statement true (T) or false (F)

Business