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ALLISIL- U_ FALL ZUID MIDTERM EXAM I W'D HUM'E EDITION 7. [10 POINTS ] Finding the implied interest rate . Bates Company has entered into
ALLISIL- U_ FALL ZUID MIDTERM EXAM I W'D HUM'E EDITION 7. [10 POINTS ] Finding the implied interest rate . Bates Company has entered into two lease agreements . In each case the cash equivalent purchase price of the asset acquired is known and you wish to find the interest rate which is applicable to the lease payments . Instructions Calculate the implied interest rate for the lease payments . Lease A - Lease A covers office equipment which could be purchased for $ 252, 336 . Bates Company has , however , chosen to lease the equipment for $70 , 000 per year , payable at the end of each of the next 5 years . Lease B _ Lease B applies to a machine which can be purchased for $201 , 212. Bates Company has chosen to lease the machine for $ 42, 000 per year on a 6 - year lease . Payments are due at the start of each year
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