Determine the annual lease payments for each situation: Note: Round your intermediate and final answers to the nearest whole dollar amount. Situation 1 Situation 2 Situation 3 Annual Lease Payments 4
Determine the annual lease payments for each situation: Note: Round your intermediate and final answers to the nearest whole dollar amount. Situation 1 Situation 2 Situation 3 Annual Lease Payments 4
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Exercise 15-28 (Static) Calculation of annual lease payments; purchase option [LO15-2, 15-6]
Three independent situations are given. Each describes a finance lease in which annual lease payments are payable at the beginning
of each year. Each lease agreement contains an option that permits the lessee to acquire the leased asset at an option price that is
sufficiently lower than the expected fair value that the exercise of the option appears reasonably certain.
Note: Use tables, Excel, or a financial calculator. (FV of $1. PV of $1. EVA of $1. PVA of $1. EVAD of $1 and PVAD of $1)
Lease term (years)
Lessor's rate of return
Fair value of leased asset
Lessor's cost of leased asset
Purchase option:
Exercise price
Exercisable at end of year:
Reasonably certain?
Situation 1
Situation 2
Situation 3
Annual Lease
Payments
1
4
5
12%
$ 60,000
$ 50,000
$ 10,000
5
yes
Situation
5
11%
$ 420,000
$ 420,000
$ 50,000
5
no
Determine the annual lease payments for each situation:
Note: Round your intermediate and final answers to the nearest whole dollar amount.
9%
$ 185,000
$ 145,000
$ 22,000
yes](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F7fc6fb8a-2a4e-45c8-9cb3-0d527fbd057c%2Fc2060314-d24d-478a-8b00-bdc0472b2eab%2Fz5i33z_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Exercise 15-28 (Static) Calculation of annual lease payments; purchase option [LO15-2, 15-6]
Three independent situations are given. Each describes a finance lease in which annual lease payments are payable at the beginning
of each year. Each lease agreement contains an option that permits the lessee to acquire the leased asset at an option price that is
sufficiently lower than the expected fair value that the exercise of the option appears reasonably certain.
Note: Use tables, Excel, or a financial calculator. (FV of $1. PV of $1. EVA of $1. PVA of $1. EVAD of $1 and PVAD of $1)
Lease term (years)
Lessor's rate of return
Fair value of leased asset
Lessor's cost of leased asset
Purchase option:
Exercise price
Exercisable at end of year:
Reasonably certain?
Situation 1
Situation 2
Situation 3
Annual Lease
Payments
1
4
5
12%
$ 60,000
$ 50,000
$ 10,000
5
yes
Situation
5
11%
$ 420,000
$ 420,000
$ 50,000
5
no
Determine the annual lease payments for each situation:
Note: Round your intermediate and final answers to the nearest whole dollar amount.
9%
$ 185,000
$ 145,000
$ 22,000
yes
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