aj.3 Kingbird Inc. wishes to lease machinery to Blossom Company. Blossom wants the machinery for 4 years, although it has a useful life of10 years. The machinery has a fair value at the commencement of the lease of $45,000, and Kingbird expects the machinery to have aresidual value at the end of the lease term of $28,000. However, Blossom does not guarantee any part of the residual value. Blossomdoes expect that the residual value will be $43,000 instead of $28,000.What would be the amount of the annual rental payments Kingbird demands of Blossom, assuming each payment will be made at theend of each year and Kingbird wishes to earn a rate of return on the lease of 5%? (For calculation purposes, use 5 decimal places asdisplayed in the factor table provided and round final answer to O decimal places, e.g. 5,275.)Click here to view factor tables.Amount of equal annual lease payments$

Expected residual value of lessor28,000X PV factor of $1 at (5%,4 years)0.8227Present value of…

$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

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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