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part g.) is Skysong Company leases an automobile with a fair value of $13,568 from John Simon Motors, Inc., on the following terms: a 1.
part g.) is
Skysong Company leases an automobile with a fair value of $13,568 from John Simon Motors, Inc., on the following terms: a 1. Non-cancelable term of 50 months. 2. Rental of $270 per month (at the beginning of each month). (The present value at 0.5% per month is $11,979.) 3. Skysong guarantees a residual value of $1,700 (the present value at 0.5% per month is $1,325). Skysong expects the probable residual value to be $1,700 at the end of the lease term. 4. Estimated economic life of the automobile is 60 months. 5. Skysong's incremental borrowing rate is 6% a year (0.5% a month). Simon's implicit rate is unknown. Suppose that instead of $1,700, Skysong expects the residual value to be only $500 (the guaranteed amount is still $1,700). How does the calculation of the present value of the lease payments change from part (b)? (Round answer to 0 decimal places, eg. 5,275.) PV of lease payments $ 12479
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