A construction company agreed to lease payments of $571.08 on construction equipment to be made at the end of every three months for 7 years. Financing is at 5% compounded quarterly.(a) What is the value of the original lease contract?(b) If, due to delays, the first 10 payments were deferred, how much money would be needed after 11 payments to bring the lease payments up to date?(c) How much money would be required to pay off the lease after 11 payments?(d) If the lease were paid off after 11 payments, what would the total interest be?(e) How much of the total interest would be due to deferring the first 10 payments?(a) The value of the original lease contract is S(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 answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.)(d) The interest would be S.(Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.)(e) The interest resulting from the deferral is S(Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.)

Hi There, thanks for posting the question. But as per Q&A guidelines, we must answer the first…

Answered: A construction company agreed to lease…

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

See similar textbooks

Similar questions

QUESTION 1: A construction company agreed to lease payments of $452.56 on construction equipment to be made at the end of every month for 9.5 years. Financing is at 11% 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? Give typing answer with explanation and conclusion
For his business, Nicholas leased equipment valued at $19,000. The terms of the lease required payments of $1550 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 11 months).
Yankee Construction agreed to lease payments of $762.79 on 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?
A lease valued at $21,000 requires payments of $1,763 at the beginning of every three months. If money is worth 5% compounded quarterly, what is the size of the final lease payment?
Keith secured a lease on a machine by paying $1,900 as a down payment and then $600 at the beginning of every month for 5 years. The lease rate was 3.75% compounded monthly. a. What was the principal amount of the lease? $0.00 Round to the nearest cent b. What was the cost of the machine? $0.00 Round to the nearest cent c. What was the amount of interest paid over the term of the lease? $0.00 Round to the nearest cent
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?
How is this wrong
A lease valued at $18,000 requires payments of $1,813 at the beginning of every month. If money is worth 6% compounded monthly, what is the size of the final lease payment? The size of the final payment is $. (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.)
A contract requires lease payments of $800 at the beginning of every month for 8 years. a. What is the present value of the contract if the lease rate is 5.22% compounded annually? b. What is the present value of the contract if the lease rate is 5.22% compounded daily?
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…

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS