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Exercise 21-03 (Part Level Submission) Sage Hill Company leases an automobile with a fair value of $17,274 from John Simon Motors, Inc., on the following
Exercise 21-03 (Part Level Submission) Sage Hill Company leases an automobile with a fair value of $17,274 from John Simon Motors, Inc., on the following terms: 1. 2. 3. Non-cancelable term of 50 months. Rental of $360 per month (at the beginning of each month). Sage Hill guarantees a residual value of $1,240. Delaney expects the probable residual value to be $1,240 at the end of the lease term. Estimated economic life of the automobile is 60 months. Sage Hill's incremental borrowing rate is 6% a year (0.5% a month). Simon's implicit rate is unknown. 4. 5. Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) (a) Your answer is correct. What is the nature of this lease to Sage Hill? The nature of this lease is a/an finance lease. SHOW LIST OF ACCOUNTS SHOW SOLUTION LINK TO TEXT LINK TO TEXT Attempts: 1 of 5 used (b) What is the present value of the lease payments to determine the lease liability? (Round answer to 0 decimal places, e.g. 5,275.) Present value of the lease payments
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