Answered step by step
Verified Expert Solution
Question
1 Approved Answer
QUESTION 31 Marin Company is negotiating to lease a piece of equipment to MTBA Inc MTBA requests that the lease be for 9 years. The
QUESTION 31 Marin Company is negotiating to lease a piece of equipment to MTBA Inc MTBA requests that the lease be for 9 years. The equipment has a useful fe of 10 years. Marin wants a guarantee that the residual value of the equipment at the end of the lease is at least 56.000 MTBA agrees to guarantee a residual value of this amount though it expects the residual value of the equipment to be only $2.500 at the end of the lease term. If the fair value of the equipment at lease commencement is 590,000, what would be the amount of the annual rental payments Marin demands of MTBA asuming each payment will be made at the beginning of each year and Marin wishes to earn a rate of return on the lease of 10 Note: Present value of 1 at 10% for 9 periods: 042410 Present value of 1 at 10% for 10 periods: 038554 Present value of an annuity due of 1 at 10% for 9 periods: 63349 Present value of an annuity due of 1 at 10% for 10 periods: 6.7590 A $13.805 8.5 12.973 OC. 14207 D. $ 14,039
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started