Apple Ltd. has decided to invest in earth-moving equipment which costs $ 5,50,000. The company can take it on lease for 7 years at $ 90,000 p.a. payable in advance. Alternatively, it can borrow at 20%. Asset can be written-off over 6 years under straight line method of depreciation. Asset’s useful life is ? years. In the terminal year the asset will be sold for $ 40,000. Tax rate is 30%. At 6th year principle amount contained in loan installment amount will be –
(A) $ 88,265
(B) $ 1,05,918
(C) $ 1,27,323
(D) $ 1,08,426

Answer rating: 100% (QA)

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