Question
Billit Corporation is considering leasing a machine to a client for five years. The machine sells for $100,000 cash. The incremental borrowing rate is 8%.
Billit Corporation is considering leasing a machine to a client for five years. The machine sells for $100,000 cash. The incremental borrowing rate is 8%. The implicit rate is unknown. Payments are quarterly and start at the commencement of the lease. What is the quarterly lease payment? Show your work.
Quarterly:
Calculation of Initial Lease Liability:
Quaterly Payment:
Non-Lease Component*:
Minimum Lease Payment:
Present Value Factor:
Present Value of Mininum Lease Payment:
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Intermediate Accounting
Authors: J. David Spiceland, James Sepe, Mark Nelson
6th edition
978-0077328894, 71313974, 9780077395810, 77328892, 9780071313971, 77395816, 978-0077400163
