Question
16. Sunland company leases a machine from vollmer corp. under an agreement which meets the criteria to be a finance lease for sunland. The six
16. Sunland company leases a machine from vollmer corp. under an agreement which meets the criteria to be a finance lease for sunland. The six year lease requires payment of $164,000 at the beginning of each year, including $24,400 per year for maintenance, insurance, and taxes. The incremental borrowing rate for the lessee is 11%. The lessors implicit rate is 9% and is known by the lessee. The present value of an annuity due of 1 for six years at 11% is 4.69690. The present value of an annuity due of 1 for six years at 9% is 4.88965.
SUNLAND RECORD THE LEASE ASSET AT:
a. 682,595
b. 655,548
c. 770,128
d. 801,903
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