Aileen Company acquired an equipment for P2,300,000. At the beginning of current year, the entity leased this equipment for a period of six years, after which, title to the machine is transferred to the lessee. The equipment is so specialized in nature that only the lessee can exclusively benefit from it. The six annual lease payments are due in advance at the beginning of each lease year. The equipment is expected to fall at P200,000 at the end of its useful life which represents the amount it can be sold therefrom. A return of 12% is designed on the lease such that the lessor will earn an amount equal to this rate. What is the annual lease rental payable in advance? Round off present value factors to two decimal places. a. P500,000 b. P477,826 c. P383,333 d. P460,000 e. None of the above

Aileen Company acquired an equipment for P2,300,000. At the beginning of current year, the entity leased this equipment for a period of six years, after which, title to the machine is transferred to the lessee. The equipment is so specialized in nature that only the lessee can exclusively benefit from it. The six annual lease payments are due in advance at the beginning of each lease year. The equipment is expected to fall at P200,000 at the end of its useful life which represents the amount it can be sold therefrom. A return of 12% is designed on the lease such that the lessor will earn an amount equal to this rate. What is the annual lease rental payable in advance? Round off present value factors to two decimal places. a. P500,000 b. P477,826 c. P383,333 d. P460,000 e. None of the above

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 1P

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