A user has an option to renew a lease on 10,000 square feet at a rate of $8 per square foot for five years. The current market rate is $10 per square foot. What is the value of the user's leasehold interest at 10 percent?
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- Pepper, Inc. agrees to lease equipment from the Blue Corporation for 10 years at $25,000 at the end of each year. The equipment has a fair value of $175,000 and an estimated useful life of 10 years. The lease includes a guaranteed residual value of $10,000. In addition to the lease payments, Pepper will pay $5,000 per year for a maintenance agreement. Pepper can finance this lease with its bank at a 12% rate. The lessor’s implicit lease rate, known to the lessee, is 10%. The lessor and the lessee use ASC 842 guidelines for lease accounting. Present value interest factors are: 10% 12% PV factor of $1 for 10 periods 0.38554 0.32197 PV factor for ordinary annuity for 10 periods 6.14457 5.65022 The Pepper lease is a(n): Multiple Choice A. operating lease because ownership does not automatically transfer to the lessee at the end of the lease term. B. short-term lease because the lease value is less than the fair value of the asset. C. operating lease because the…A builder is offering $137,381 loans for his properties at 9 percent for 25 years. Monthly payments are based on current market rates of 9.5 percent and are to be fully amortized over 25 years. The property would normally sell for $150,000 without any special financing. Required: a. At what price should the builder sell the properties to earn, in effect, the market rate of interest on the loan? Assume that the buyer would have the loan for the entire term of 25 years. Do not round intermediate calculations. Round your final answer to the nearest whole dollar amount.) b. At what price should the builder sell the properties to earn, in effect, the market rate of interest on the loan if the property is resold after 10 years and the loan repaid? Do not round intermediate calculations. Round your final answer to the nearest whole dollar amount.)A property owner is evaluating the following alternatives for leasing space in his office building for the next five years: Gross lease. Rent will be $34 per square foot each year with the lessor responsible for payment of all operating expenses. Expenses are estimated to be $9 during the first year and increase by $1 per year thereafter. Calculate the effective rent to the owner (after expenses) for the lease using a 11 percent discount rate. (Click to select) (Click to select) $29.01 $18.57 $23.21 $22.05
- The Harris Company is the lessee on a four-year lease with the following payments at the end of each year: Year 1 : $18,000 Year 2: $23,000 Year 3: $28,000 Year 4: $33,000 An appropriate discount rate is 7%, yielding a present value of $84,943. If the lease is an operating lease, what will be the initial value of the right-of-use asset?Pepper, Inc. agrees to lease equipment from the Blue Corporation for 10 years at $25,000 at the end of each year. The equipment has a fair value of $175,000 and an estimated useful life of 10 years. The lease includes a guaranteed residual value of $10,000. In addition to the lease payments, Pepper will pay $5,000 per year for a maintenance agreement. Pepper can finance this lease with its bank at a 12% rate. The lessor's implicit lease rate, known to the lessee, is 10%. The lessor and the lessee use ASC 842 guidelines for lease accounting. Present value interest factors are: 10% 12% PV factor of $1 for 10 periods PV factor for ordinary annuity for 10 periods 0.38554 0.32197 6.14457 5.65022 The entry to record this lease on Pepper's books is (Round intermediate and final answer to the nearest whole dollar amount.) Multiple Choice DR Right-to-use asset-finance lease 144,475 CR Finance lease liability 144,475 DR Right-to-use asset-finance lease 157,469 CR Finance lease liability 157,469…Bird Wing Bedding can lease an asset for 4 years with payments of $22,000 due at the beginning of the year. The firm can borrow at a 6% rate and pays a 25% federal-plus-state tax rate. The lease qualifies as a tax-oriented lease. What is the cost of leasing?
- Pepper, Inc. agrees to lease equipment from the Blue Corporation for 10 years at $25,000 at the end of each year. The equipment has a fair value of $175,000 and an estimated useful life of 10 years. The lease includes a guaranteed residual value of $10,000. In addition to the lease payments, Pepper will pay $5,000 per year for a maintenance agreement. Pepper can finance this lease with its bank at a 12% rate. The lessor’s implicit lease rate, known to the lessee, is 10%. The lessor and the lessee use ASC 842 guidelines for lease accounting. Present value interest factors are: 10% 12% PV factor of $1 for 10 periods 0.38554 0.32197 PV factor for ordinary annuity for 10 periods 6.14457 5.65022 Upon acquisition, the leased equipment will be valued on Pepper’s balance sheet at: Multiple Choice A. $144,475. B. $157,469. C. $175,000. D. $250,000.A real estate broker decides to lease a car for 36 months. Suppose the annual interest rate is 7.8%, the negotiated price is $48,000, there is no trade-in, and the down payment is $3,000. Find the monthly lease payment (in dollars). Assume that the residual value is 48% of the MSRP of $51,800.A company lease equipment for 7 years. The equipment cost 28,000 and the owner wants to earn 9.5 percent on the lease. What should be the required lease payments?
- A lease valued at $40,000 requires payments of $5000 every three months. If the first payment is due three years after the lease was signed and interest is 10% compounded quarterly, what is the term of the lease? The term of the lease is quarters. (Round up to the nearest quarter.)McGee Leasing leased a car to a customer. McGee will receive $300 a month,at the end of each month, for 36 months. Use the PV function in Excel® to calculate the asnwers to the following questions1. What is the present value of the lease if the annual interest rate in the lease is 18%?2. What is the present value of the lease if the car can likely be sold for $6,000 at the end ofthree years?Manning Imports is contemplating an agreement to lease equipment to a customer for five years. Manning normally sells the asset for a cash price of $100,000. Assuming that 8% is a reasonable rate of interest, what must be the amount of quarterly lease payments (beginning at the commencement of the lease) in order for Manning to recover its normal selling price as well as be compensated for financing the asset over the lease term?