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Francisco leased equipment from Julio on December 31, 2021. The lease is a 10-year lease with annual payments of $160,000 due on December 31 of
Francisco leased equipment from Julio on December 31, 2021. The lease is a 10-year lease with annual payments of $160,000 due on December 31 of each year beginning December 31, 2021. The present value of the lease payments is $1,045,928. Francisco's incremental borrowing rate is 13% for this type of lease. The implicit rate of 11% is known by the lessee. What should be the balance in Francisco lease liability at December 31, 2022?
Multiple Choice
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$819,880.
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$885,928.
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$829,890.
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$823,380.
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