Question
Nash Inc. manufactures an X-ray machine with an estimated life of 12 years and leases it to Crane Medical Center for a period of 10
Nash Inc. manufactures an X-ray machine with an estimated life of 12 years and leases it to Crane Medical Center for a period of 10 years. The normal selling price of the machine is $536,892, and its guaranteed residual value at the end of the non-cancelable lease term is estimated to be $16,100. The hospital will pay rents of $65,000 at the beginning of each year. Nash incurred costs of $233,000 in manufacturing the machine and $12,600 in legal fees directly related to the signing of the lease. Nash has determined that the collectibility of the lease payments is probable and that the implicit interest rate is 5%. Crane Medical Center has an incremental borrowing rate of 5% and an expected residual value at the end of the lease of $10,000. Click here to view factor tables. (a) Partially correct answer icon Your answer is partially correct. Discuss the nature of this lease in relation to the lessee. The nature of this lease in relation to the lessee is finance lease . Compute the amount of the initial lease liability. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 5,275.) Initial Lease Liability
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