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Your firm needs to invest in a new delivery truck. The life expectancy of the delivery truck is five years. You can purchase a new delivery truck fo an upfront cost of $200,000, or you can lease a truck from the manufacturer for five years for a monthly lease payment of $4,000 (paid at the end of each month). Your firm can borrow at 8.2% APR with quarterly compounding. The monthly discount rate that you should use to evaluate the truck lease is closest to: OA. 0.8144% OB. 0.6833% OC. 0.543% OD. 0.6787%

Your firm needs to invest in a new delivery truck. The life expectancy of the delivery truck is five years. You can purchase a new delivery truck fo an upfront cost of $200,000, or you can lease a truck from the manufacturer for five years for a monthly lease payment of $4,000 (paid at the end of each month). Your firm can borrow at 8.2% APR with quarterly compounding. The monthly discount rate that you should use to evaluate the truck lease is closest to: OA. 0.8144% OB. 0.6833% OC. 0.543% OD. 0.6787%

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Your firm needs to invest in a new delivery truck. The life expectancy of the delivery truck is five years. You can purchase a new delivery truck for an upfront cost of $200,000, or you can lease a truck from the manufacturer for five years for a monthly lease payment of $4,000 (paid at the end of each month). Your firm can borrow at 8.2% APR with quarterly compounding. The monthly discount rate that you should use to evaluate the truck lease is closest to: OA. 0.8144% OB. 0.6833% OC. 0.543% OD. 0.6787%
Transcribed Image Text:Your firm needs to invest in a new delivery truck. The life expectancy of the delivery truck is five years. You can purchase a new delivery truck for an upfront cost of $200,000, or you can lease a truck from the manufacturer for five years for a monthly lease payment of $4,000 (paid at the end of each month). Your firm can borrow at 8.2% APR with quarterly compounding. The monthly discount rate that you should use to evaluate the truck lease is closest to: OA. 0.8144% OB. 0.6833% OC. 0.543% OD. 0.6787%
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