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Exercise 21A-3 a-g Kingbird Company leases an automobile with a fair value of $15,671 from John Simon Motors, Inc., on the following terms: 1. Non-cancelable
Exercise 21A-3 a-g Kingbird Company leases an automobile with a fair value of $15,671 from John Simon Motors, Inc., on the following terms: 1. Non-cancelable term of 50 months. 2. Rental of $320 per month (at the beginning of each month). (The present value at 0.5% per month is $14,197.) 3. Kingbird guarantees a residual value of $1,500 (the present value at 0.5% per month is $1,169). Kingbird expects the probable residual value to be $1,500 at the end of the lease term. 4. Estimated economic life of the automobile is 60 months. 5. Kingbird's incremental borrowing rate is 6% a year (0.5% a month). Simon's implicit rate is unknown Click here to view the factor table. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.)
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