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Pat Delaney Company leases an automobile with a fair value of $13, 291 from John Simon Motors, Inc., on the following terms. Noncancelable term of
Pat Delaney Company leases an automobile with a fair value of $13, 291 from John Simon Motors, Inc., on the following terms. Noncancelable term of 60 months. Rental of $280 per month (at end of each month). (The present value at 1% per month is $12, 587.) Estimated residual value after 60 months is $1, 160. (The present value at 1% per month is $639.) Delaney Company guarantees the residual value of $1, 160. Estimated economic life of the automobile is 61 months. Delaney Company's incremental borrowing rate is 12% a year (1% a month). Simon's implicit rate is unknown. What is the present value of the minimum lease payments? The present value of the minimum lease payments $
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