Company X wants to obtain a new tractor, and has found a good option at Tractor Supply. Company X can either buy the tractor for $24,500, or it can lease it for 4 years with a payment of $6000. A payment is due at the inception of the lease. The effective rate in the market for an equipment loan is 5%. The Company feels that this tractor will have a useful life of 5 years.

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% PV/FMV N/A N/A Lease Tvpe Criteria: Ownership Transfers at end of lease? (Yes or No) Purchase Option? (Yes or No) Lease term 75% or > than economic life? (calculate %)(Yes or No) NPV of pmts >90% of Fair Value? (Calculate %)(Yes or No) Special Purpose? Type of Lease? (Operating or Finance) Yes/No? N/A Lease Amortization Table Decrease in Interest Rate Payment Date Cost 1st pmt 2nd pmt 3rd pmt 4th pmt Payment Interest pmt Balance Liability Totals