Question
How would I put this in my BA II plus? I know i'm trying to find PV, and I know what PMT, n, and the
How would I put this in my BA II plus? I know i'm trying to find PV, and I know what PMT, n, and the interest. I think I'm getting the FV wrong I'm using 24,000. If the FV is a different number please explain why. Thank you.
Given: Lease term of 6 years, non-cancellable Annual payments $5,000 (due at beginning of each year, starting September 1, 2018) Fair value of asset August 31, 2018, 2022 and 2024: $24,000, $6,000 and $1,000 respectively Probability-weighted expected value of residual $1,000 Lessors initial direct costs $365 Lease has renewal option, which will likely be taken to renew lease for 2 additional years at $4,500 per year Lessees incremental borrowing rate = 9% Rate implicit in the lease = 9% Title retained by lessor
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