Suppose the purchase price of a truck is $120,000, and its residual value in four years is certain to be $30,000. There is no risk that the lessee will default on the lease. Lease payments are made at the beginning of each payment period. Assume that capital markets are perfect and the risk-free interest rate is 6% APR with monthly compounding. The monthly lease payments for a four-year fixed-price lease with a $21,000 final price of the truck are closest to:

a.$2400.

b.$1540.

c.$1730.

d.$1800.

Theoretical economic models implies that:

a.Brown firms, compare to green firms, should earn lower returns

b.Brown firms, compare to green firms, should earn higher returns

c.Brown firms, compare to brown firms, should have higher cost of capital

d.A and C

e.B and C