1.A construction company agreed to leasepayments of $536.13 on construction equipment tobe made at the end of every month for 5.25 years.Financing is at 9% compounded monthly.(a) What is the value of the original lease contract?(b) If, due to delays, the first 6 payments weredeferred, how much money would be needed after7 payments to bring the lease payments up todate?(c) How much money would be required to pay offthe lease after 7 payments?(d) If the lease were paid off after 7 payments, whatwould the total interest be?(e) How much of the total interest would be due todeferring the first 6 payments?2.What is the discounted value of payments of$92.00 made at the end of every three months for8.5 years if interest is 12% compounded quarterly?

Note: This question has two questions. The first has multiple subparts. The first three subparts in…

Answered: 1.A construction company agreed to…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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A construction company agreed to lease payments of $573.95 on construction equipment to be made at the end of every month for 5 years. Financing is at 7% compounded monthly. (a) What is the value of the original lease contract? (b) If, due to delays, the first 9 payments were deferred, how much money would be needed after 10 payments to bring the lease payments up to date? (c) How much money would be required to pay off the lease after 10 payments? (d) If the lease were paid off after 10 payments, what would the total interest be? (e) How much of the total interest would be due to deferring the first 9 payments? C... (a) The value of the original lease contract is $. (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.) (b) The company would have to pay $. (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.) (c) The company would need $. (Round the final…
5. On June 30, year 1, Menchen, Inc. leased equipment from Davis Leasing. The lease agreement calls for Menchen to make semiannual lease payments of $ 400, 500 over a seven- year lease term, on June 30 and December 31. This is also the assets useful life. The first payment was due immediately on June 30, year 1. The interest rate used is the incremental borrowing rate of 11%. The cost of the asset to Davis was $ 4,051,891 using a factor of 10.11708. a. using an amortization table what amount would Davis show on its balance sheet on December 31, year 1? b. what amount would Davis show on its income statement on December 31,year 1?
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At the beginning of the year, Cazenovia, Inc. Entered into a five-year lease for equipment that was valued at $95,000. The company will be required to make annual lease payments of $22,000 for five years at year-end. The implicit interest rate is 5% and the company classified the lease as a finance lease. Required What is the balance sheet value of the lease asset and the lease liability? Why was the lease categorized as a finance lease? How much is interest expense in the first year? What is the reduction in the lease liability in the first year? What is the total expense if straight-line amortization is used for the leased asset?
S Terms of a lease agreement and related facts were as follows: a. The lease asset had a retail cash selling price of $100,000. Its useful life was six years with no residual value (straight-line depreciation). b. Annual lease payments at the beginning of each year were $20,873, beginning January 1. c. Lessor's implicit rate when calculating annual rental payments was 10%. d. Costs of $2,062 for legal fees for the lease execution were the responsibility of the lessor. Required: Prepare the appropriate entries for the lessor to record the lease, the initial payment at its beginning, and at the December 31 fiscal year-end under each of the following three independent assumptions: 1. The lease term is three years and the lessor paid $100,000 to acquire the asset (operating lease). 2. The lease term is six years and the lessor paid $100,000 to acquire the asset. Also assume that adjusting the lease receivable (net investment) by initial direct costs reduces the effective rate of interest…
On the date of its financial statements, a company has 4.5 years remaining on the lease of the truck. The lease requires payments of $3000 at the beginning of every six months. What book value is reported for the lease liability if the company pays 5% compounded monthly on its medium-term debt?
A property is currently leased for $100,000 p.a. with fully recoverable outgoings. The lease has 3 years to run on the current (fixed) rent. The market rent for the property is $120,000. What is the current value of the property subject to the lease at a yield of 8% ? Assume rents are paid annually in arrears.
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Question: Yankee Construction agreed to lease payments of $762.79 on the construction equipment to be made at the end of each month for six years. Financing is at 15% compounded monthly. a) What is the value of the original lease contract? b) If, due to delays, the first eight payments were deferred, how much money would be needed after nine months to bring the lease payments up to date? c) How much money would be required to pay off the lease after nine months? d) If the lease were paid off after nine months, what would the total interest be? e) How much of the total interest would be due to deferring the first eight payments?
For his business, Nicholas leased equipment valued at $25,000. The terms of the lease required payments of $1950 every month. If the first payment is due eighteen months after the lease was signed and interest is 5% compounded semi-annually, what is the term of the lease? State your answer in years and months (from 0 to 11months). The term of the lease is .year(s) and .month(s)

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