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On January 1, 2017, Wood Corporation leases a piece of equipment from Prior Corporation and properly accounts for the equipment as a finance lease. Under
On January 1, 2017, Wood Corporation leases a piece of equipment from Prior Corporation and properly accounts for the equipment as a finance lease. Under the agreement, Wood will make 5 annual payments of $550,000 each January 1st. At the end of 5 years, Wood has the option of buying the equipment for $100,000, when the estimated fair value will be $400,000. If Wood's incremental borrowing rate is 7%, what is the present value of the minimum lease payments?
None of the above
$2,326,407.21
$2,688,231.04
$2,484,264.81
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