In a nutshell: Long term leases are treated as assets. The value of this asset is the present value of the lease payments. )

a) What would be the value of the lease asset if Koa Breads leased equipment for 5 years with payments of $6,000 due at the beginning of each year? The interest rate is 10%. Round your answer to the nearest dollar.

b) What would be the present value of the lease asset if Koa Breads leased equipment for 5 years with payments of $6,000 due at the beginning of each year? The interest rate is 10%. but Koa Breads could then buy this equipment at the end of the 5 years for $1,000. This purchase option is a bargain and Koa Breads is expected to take it.