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Your firm needs to invest in a new delivery truck. The life expectancy of the delivery truck is ...

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Your firm needs to invest in a new delivery truck. The life expectancy of the delivery truck is ...

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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 $4000 (paid at the end of each month). Your firm can borrow at 6% APR with quarterly compounding.

The effective annual rate on your firm's borrowings is closest to:

▸ 6.17%

▸ 6.14%

▸ 6.24%

▸ 6.00%

Textbook

Fundamentals of Corporate Finance

Edition: 2^nd

Authors: Berk, DeMarzo, Harford

Read 128 times

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trea48 Author

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