Each of the four independent situations below describes a finance lease in which annual lease payments are payable at the beginning of each year. The lessee is aware of the lessor’s implicit rate of return. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Situation 1 2 3 4 Lease term (years) 5 8 6 9 Lessor's rate of return 9% 10% 8% 11% Fair value of lease asset $ 69,000 $ 369,000 $ 94,000 $ 484,000 Lessor's cost of lease asset $ 69,000 $ 369,000 $ 64,000 $ 484,000 Residual value: Estimated fair value 0 $ 69,000 $ 26,000 $ 38,000 Guaranteed fair value 0 0 $ 26,000 $ 43,000
Each of the four independent situations below describes a finance lease in which annual lease payments are payable at the beginning of each year. The lessee is aware of the lessor’s implicit rate of return. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Situation 1 2 3 4 Lease term (years) 5 8 6 9 Lessor's rate of return 9% 10% 8% 11% Fair value of lease asset $ 69,000 $ 369,000 $ 94,000 $ 484,000 Lessor's cost of lease asset $ 69,000 $ 369,000 $ 64,000 $ 484,000 Residual value: Estimated fair value 0 $ 69,000 $ 26,000 $ 38,000 Guaranteed fair value 0 0 $ 26,000 $ 43,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Each of the four independent situations below describes a finance lease in which annual lease payments are payable at the beginning of each year. The lessee is aware of the lessor’s implicit
Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)
Situation | ||||
---|---|---|---|---|
1 | 2 | 3 | 4 | |
Lease term (years) | 5 | 8 | 6 | 9 |
Lessor's rate of return | 9% | 10% | 8% | 11% |
Fair value of lease asset | $ 69,000 | $ 369,000 | $ 94,000 | $ 484,000 |
Lessor's cost of lease asset | $ 69,000 | $ 369,000 | $ 64,000 | $ 484,000 |
Residual value: | ||||
Estimated fair value | 0 | $ 69,000 | $ 26,000 | $ 38,000 |
Guaranteed fair value | 0 | 0 | $ 26,000 | $ 43,000 |
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