Question
Each of the independent situations below describes a finance lease in which annual lease payments are payable at the beginning of each year. The lessee
Each of the independent situations below describes a finance lease in which annual lease payments are payable at the beginning of each year. The lessee is aware of the lessor's implicit interest rate.
Situation12Lease term10yrs20yrsLessor's desired rate of return8%10%Lessee's incremental borrowing rate10%8%Fair value of asset$650,000$450,000
For convenience, here are some table values:
Periods; int. ratePV, ordinary annuityPV, annuity due10 periods, 8%6.71017.246910 periods, 10%6.14466.759020 periods, 8%9.818110.603620 periods, 10%8.51369.3649
Required:
For each situation determine the amount of the annual lease payment, as calculated by the lessor.(Round your final answers to the nearest whole dollar.)
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