10. Jagadison Co. leases computer equipment to customers under sales-type leases. The equipment has no residual value at the end of the lease and the leases do not contain purchase options. Jagadison desires a return of 8% interest on a five-year lease of equipment with a fair value of $970,425. The present value of an annuity due of $1 at 8% for five years is 4.313. What is the total amount of interest revenue that Jagadison will earn over the life of the lease? A) $154,575 B) $225,000 C) $388,080 D) $418,350

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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10. Jagadison Co. leases computer equipment to customers under sales-type leases. The
equipment has no residual value at the end of the lease and the leases do not contain purchase
options. Jagadison desires a return of 8% interest on a five-year lease of equipment with a fair
value of $970,425. The present value of an annuity due of $1 at 8% for five years is 4.313. What
is the total amount of interest revenue that Jagadison will earn over the life of the lease?
A) $154,575
B) $225,000
C) $388,080
D) $418,350
Transcribed Image Text:10. Jagadison Co. leases computer equipment to customers under sales-type leases. The equipment has no residual value at the end of the lease and the leases do not contain purchase options. Jagadison desires a return of 8% interest on a five-year lease of equipment with a fair value of $970,425. The present value of an annuity due of $1 at 8% for five years is 4.313. What is the total amount of interest revenue that Jagadison will earn over the life of the lease? A) $154,575 B) $225,000 C) $388,080 D) $418,350
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