QUESTION 1 Assume a company (lessee) signs a lease for a forklift with the following predicates: Fair value of the forklift is $16,000

Lease term is 3 years

Monthly payments of $500/month paid in advance

$50 of the monthly payment is related to the maintenance Interest rate a bank would charge this company for a $16,000 loan over 3 years is 4% of the Useful Life of the forklift is 5 years

Required: At the end of the lease term, the company can purchase the forklift for $1,000, which is the estimated fair value at the end of the lease