Ajax Capital Has Determined That the Amount to Be Amortized

Multiple Choice

Ajax Capital has determined that the amount to be amortized on an extruder is $540,000. What annual lease payment must Ajax (lessor) require from the lessee if the required rate of return is 16%? Assume that the lease payments will be made at the beginning of each of the 7 years of the lease agreement and that the marginal tax rate is 40%.

A) $288,140
B) $222,827
C) $115,256
D) $192,093