On January 1, 2019, Yard Art leased a delivery truck from BTG. BTZ originally paid

$120,000 for the truck.

The lease agreement specified annual payments of $40,000 beginning January 1, 2019, the

inception of the lease, and at each December 31 through 2021. BTZ' interest rate for determining

payments was 11%. Yard Art's incremental borrowing rate is 12%. The estimated useful life of

the truck is 5 years with no salvage value. Both companies use straight-line depreciation.

At the end of the four-year lease term (December 31, 2022) the truck was expected to be

worth $30,000. Yard Art guaranteed a residual value of $10,000. A third party guarantor

Assurance Corporation guaranteed $10,000 and the rest was unguaranteed.

8) Going back to (2), prep amortization tables Yard Art under the following (separate)

alternative scenarios. For each scenario, assume all else are fixed.

a) Yard Art's incremental borrowing rate was 10%.

b) Yard Art guaranteed $5,000 of the residual value, a 3rd party guaranteed $5,000, and the rest was unguaranteed.

c) Lease payment was $25,000.