Mart finds out that Bopple will start to sell a new version of the iSLEEP ( called the iSLEEP Z ) early in July 201 x. As a result , Large Mart believes that all iSLEEPS that are currently in store can only be sold if the sales price is immediately reduced to $500 per iSLEEP . On 1 July 201 x , Large Mart leases a company car for the service department of the BAple store ( called the " Nerd Herd " ) . The duration of the lease is & years , and the car has an expected useful life of & years . The lease contract requires Large Mart to pay $5, 000 at the time the lease is signed . This payment is made via a bank transfer . A further 58, 000 must be paid ( also via bank transfer ) on the 30 June of each year , starting on the 30 June 201 x + 1 . The lease contract states that Large Mart can cancel the lease at any time* during the lease period , but that Large Mart must pay a fine equal to 85% of the remaining lease liability if the lease contract is cancelled . The interest rate* implicit in the lease is 10% . Large Mart decided to enter into the lease* agreement instead of purchasing the car because the purchase price would have been $47. 500 , and Large Mart did not have sufficient cash resources to make such a purchase at that time . The car is depreciated using the same depreciation method that is used for all other motor vehicles . Large Mart expects that the residual value of the car at the end of the useful life will be $500 . The lease contract also includes a clause that allows Large Mart to purchase the car at the end of the lease term for a price of $ 400