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Fisa, Inc. leased equipment from Williamsburg Company under a four - year lease requiring equal annual payments of $68, 830, with the first payment due
Fisa, Inc. leased equipment from Williamsburg Company under a four - year lease requiring equal annual payments of $68, 830, with the first payment due at lease inception . The lease does not transfer ownership , nor is there a bargain purchase option . The equipment has a 4 - year useful life and no salvage value . Pisa , Inc . 's incremental borrowing rate is 10%' and the rate implicit in the lease ( which is known by* Pisa , Inc. ) is 89/16. Assuming that this lease is properly classified as a capital lease , what is the approximate amount of principal reduction recorded when the second lease payment is made in Year 2 ? PV Annuity Due PV' Ordinary Annuity 896, 4 periods 3.57 710 3. 3121.3 10%6, 4 periods 3. 48685 3. 16985 Select one" a. $50, 269 0. $54, 640 C . $49, 134 d. $56, 099 E . $50, 592
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