Coco company leases luxury equipment to its clients under sales-type leases. Coco's equipment has no residual value at the end of lease and the leases do not contain purchase options. Coco wants an annual return of 12% interest on a seven-year lease of equipment with a fair value of $ 720,651,000. The first lease payment must be made immediately in the beginning of lease term. What is the total amount of interest revenue that Coco will earn over the life of the lease?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Coco company leases luxury equipment to
its clients under sales-type leases. Coco's
equipment has no residual value at the end
of lease and the leases do not contain
purchase options. Coco wants an annual
return of 12% interest on a seven-year
lease of equipment with a fair value of $
720,651,000. The first lease payment
must be made immediately in the
beginning of lease term. What is the total
amount of interest revenue that Coco will
earn over the life of the lease?
Transcribed Image Text:Coco company leases luxury equipment to its clients under sales-type leases. Coco's equipment has no residual value at the end of lease and the leases do not contain purchase options. Coco wants an annual return of 12% interest on a seven-year lease of equipment with a fair value of $ 720,651,000. The first lease payment must be made immediately in the beginning of lease term. What is the total amount of interest revenue that Coco will earn over the life of the lease?
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