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Scenario 1: Here are some inputs for a noncancellable lease arrangement: Annual lease payment: $32,000 (used to determine PMT) Implicit rate: 6% (used to determine
Scenario 1: Here are some inputs for a noncancellable lease arrangement: Annual lease payment: $32,000 (used to determine PMT) Implicit rate: 6% (used to determine I/Y maybe? See textbook) Incremental borrowing rate: 7% (used to determine I/Y maybe? See textbook) Lease term: 4 years (used to determine N) Unguaranteed residual value: $15,000 (used to determine FV maybe? See textbook) Calculate the present value of the minimum lease payments from the viewpoint of both the lessor (implicit rate) and the lessee (incremental borrowing rate): PV of the minimum lease payments (lessor): PV of the minimum lease payments (lessee)
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