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The lessor company leases a building to the lessee company on 1/1/2021. The lessee will make ten annual rental payments of $58,000 at the beginning
The lessor company leases a building to the lessee company on 1/1/2021. The lessee will make ten annual rental payments of $58,000 at the beginning of each year, starting from 1/1/2021. Both parties expect a residual value of $16,000 at the end of the lease term, though this amount is not guaranteed. The lessor company set the lease payments with the intent of earning a 10% return, and the lessee is aware of this rate. Suppose the lessee incurs initial direct costs of $4,500 related to the lease. What is the amount for Right-of- Use Asset the lessee will record on 1/1/2021? (You must choose from the following present/future values. Please do not use the tables in the textbook, tables posted on the Blackboard, or values from a financial calculator.) Future Value Single Sum Present Value Future Value Present Value Single Sum Ordinary Annuity Ordinary Annuity Present Value Annuity Due 10%, 10 periods 2.59 0.39 15.94 6.14 6.76
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