1. SNC Limited is leasing a used Caterpillar excavator to Town Construction Ltd. The term of the lease is 9 years and the excavator will be owned by Town at the end of the lease if Town makes an additional payment to SNC of $ 43,000. The excavator cost SNC $ 430,000. SNC wants to charge a rate of 9% on the lease. What will be the amount of the annual lease payments if the payments are made at the end of each of the next 9 years?

2. Sandhill Concrete Ltd. own a cement manufacturing equipment and needs to determine the asset's value in use to test for impairment. Sandhill's management estimates that the equipment will last for another four years and that it will generate the following future cash flows at the end of each year:

YEAR 1: 19600

YEAR 2: 17000

YEAR 3: 22500

YEAR 4: 17000

a. Calculate the value in use in order to compare to the carrying value of the equipment?

b. Calculate the present value of each of these future cash flows. Using a discount rate of 6%. (Year1?year2?year3?year4?)