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$20, wever, the residual value will be $43,000 instead of $28,000. ot guara factor tables al he amount of the annual rental payments Kingbird demands of Blossom, assum and Kingbird wishes to earn a rate of return on the lease of 5%? (For calculation ctor table provided and round final answer to O decimal places, e.g. 5,275.)

$20, wever, the residual value will be $43,000 instead of $28,000. ot guara factor tables al he amount of the annual rental payments Kingbird demands of Blossom, assum and Kingbird wishes to earn a rate of return on the lease of 5%? (For calculation ctor table provided and round final answer to O decimal places, e.g. 5,275.)

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Kingbird Inc. wishes to lease machinery to Blossom Company. Blossom wants the machinery for 4 years, although it has a useful life of 10 years. The machinery has a fair value at the commencement of the lease of $45,000, and Kingbird expects the machinery to have a residual value at the end of the lease term of $28,000. However, Blossom does not guarantee any part of the residual value. Blossom does expect that the residual value will be $43,000 instead of $28,000. What would be the amount of the annual rental payments Kingbird demands of Blossom, assuming each payment will be made at the end of each year and Kingbird wishes to earn a rate of return on the lease of 5%? (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answer to O decimal places, e.g. 5,275.) Click here to view factor tables. Amount of equal annual lease payments $
Transcribed Image Text:Kingbird Inc. wishes to lease machinery to Blossom Company. Blossom wants the machinery for 4 years, although it has a useful life of 10 years. The machinery has a fair value at the commencement of the lease of $45,000, and Kingbird expects the machinery to have a residual value at the end of the lease term of $28,000. However, Blossom does not guarantee any part of the residual value. Blossom does expect that the residual value will be $43,000 instead of $28,000. What would be the amount of the annual rental payments Kingbird demands of Blossom, assuming each payment will be made at the end of each year and Kingbird wishes to earn a rate of return on the lease of 5%? (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answer to O decimal places, e.g. 5,275.) Click here to view factor tables. Amount of equal annual lease payments $
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