Exercise 13-8 Determining lease payment amount (LO 13-1) Below are three independent lease scenarios. Payments are made at the end of each year. Use tables (PV of 1, PVAD of 1, and PVOA of 1) (Use the appropriate factor(s) from the tables provided. Round your intermediate calculations and final answers to the nearest whole dollar amount.) Cost of equipment to lessor Fair value of equipment Guaranteed residual value Unguaranteed residual value Bargain purchase option Life of lease Economic life of asset Rate of return required $10,000 Case 1 $50,000 $70,000 Case 2 $64,000 $80,000 Case 3 $100,000 $100,000 $ 8,000 10 years 12 years 12% 15 years $ 20,000 $ 4,500 16 years 9% 8 years 10 years 7% Required: Calculate the lease payments for the above three cases. Lease payment Case 1 Case 2 Case 3

Exercise 13-8 Determining lease payment amount (LO 13-1) Below are three independent lease scenarios. Payments are made at the end of each year. Use tables (PV of 1, PVAD of 1, and PVOA of 1) (Use the appropriate factor(s) from the tables provided. Round your intermediate calculations and final answers to the nearest whole dollar amount.) Cost of equipment to lessor Fair value of equipment Guaranteed residual value Unguaranteed residual value Bargain purchase option Life of lease Economic life of asset Rate of return required $10,000 Case 1 $50,000 $70,000 Case 2 $64,000 $80,000 Case 3 $100,000 $100,000 $ 8,000 10 years 12 years 12% 15 years $ 20,000 $ 4,500 16 years 9% 8 years 10 years 7% Required: Calculate the lease payments for the above three cases. Lease payment Case 1 Case 2 Case 3

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter19: Lease Financing

Section: Chapter Questions

Problem 1Q: Define each of the following terms: a. Lessee; lessor b. Operating lease; financial lease;...

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es Exercise 15-24 (Algo) Calculation of annual lease payments; residual value [LO15-2, 15-6] 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. EVAD of $1 and PVAD of $1) Situation 1 2 3 4 Lease term (years) 5 8 6 9 Lessor's rate of return Fair value of lease asset 8% 9% 7% 10% $ 55,000 $355,000 Lessor's cost of lease asset $ 55,000 $ 355,000 $ 80,000 $ 50,000 $470,000 $ 470,000 Residual value: Estimated fair value Guaranteed fair value 0 $ 55,000 $12,000 $50,000 0 0 $ 12,000 $ 55,000 Required: a. & b. Determine the amount of the annual lease payments as calculated by the lessor and the amount the lessee would record as a right-of-use asset and a lease liability, for each of the above situations. Note: Round your answers to the nearest…
Exercise 15-24 (Algo) Calculation of annual lease payments; residual value [LO15-2, 15-6] Each of the four independent situations below describes a finance lease in which annual lease payments are payable at the begin 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) Lease term (years) Lessor's rate of return Fair value of lease asset Lessor's cost of lease asset Residual value: Estimated fair value. Guaranteed fair value Situation 1 Situation 2 Situation 3 Situation 4 Lease Payments $ $ 13,907 2,404,814 1 $ $ $ 6 9% $ 68,000 $ 68,000 0 0 $ 0 0 2 Residual Value PV of Lease Guarantee Payments Situation $368,000 $368,000 9 10% $ 68,000 0 68,000 $ 339,161 $ $ 3 Required: a. & b. Determine the amount of the annual lease payments as calculated by the lessor and the amount the lessee would record a right-of-use asset and a lease liability, for…
Exercise 15-24 (Algo) Calculation of annual lease payments; residual value [LO15-2, 15-6] 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. (EV of $1. PV of $1, FVA of $1. PVA of $1. FVAD of $1 and PVAD of $1) Situation 2 B 4 Lease term (years) Lessor's rate of return Fair value of lease asset 5 10% 8 11% 6 9% 9 12% $ 57,000 Lessor's cost of lease asset $ 57,000 $ 357,000 $ 357,000 $ 82,000 $ 52,000 $ 472,000 $ 472,000 Residual value: Estimated fair value 0 $ 57,000 $ 14,000 $ 29,000 Guaranteed fair value 0 $ 14,000 $ 34,000 Required: a. & b. Determine the amount of the annual lease payments as calculated by the lessor and the amount the lessee would record as a right-of-use asset and a lease liability, for each of the above situations. Note: Round your answers to the nearest…
Exercise 15-24 (Algo) Calculation of annual lease payments; residual value [LO15-2, 15-6] 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) Lease term (years) Lessor's rate of return Fair value of lease asset Lessor's cost of lease asset Residual value: Estimated fair value Guaranteed fair value. Situation 1 Situation 2 Situation 3 Situation 4 Lease Payments $ 70,000 $ 70,000 4 10% Residual Value Guarantee 0 0 $ 2 7 11% $ 370,000 $ 370,000 PV of Lease Payments $ 70,000 0 Situation 70,000 $ $ GA 3 Required: a. & b. Determine the amount of the annual lease payments as calculated by the lessor and the amount the lessee would record as a right-of-use asset and a lease liability, for each of the above situations.…
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Exercise 15-24 (Algo) Calculation of annual lease payments; residual value [LO15-2, 15-6] 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) Lessor's rate of return Fair value of lease asset 5 10% 8 11% 6 9% 9 12% $ 57,000 $ 357,000 Lessor's cost of lease asset $ 57,000 $ 357,000 $ 82,000 $ 52,000 $ 472,000 $ 472,000 0 $ 57,000 $ 14,000 $ 29,000 e 0 $ 14,000 $ 34,000 Residual value: Estimated fair value Guaranteed fair value Required: a. & b. Determine the amount of the annual lease payments as calculated by the lessor and the amount the lessee would record as a right-of-use asset and a lease liability, for each of the above situations. Note: Round your answers to the nearest…
Exercise 15-24 (Algo) Calculation of annual lease payments; residual value [LO15-2, 15-6] 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) Lease term (years) Lessor's rate of return Fair value of lease asset Lessor's cost of lease asset Residual value: Estimated fair value Guaranteed fair value Situation 1 Situation 2 Situation 3 Situation 4 Lease Payments 1 $ $ $ $ 6 10% $ 58,000 $ 58,000 0 10 10 5,000 0 0 2 Residual Value PV of Lease Guarantee Payments Situation $ 358,000 $ 358,000 9 11% $ 58,000 0 $ $ $ 3 $ 83,000 $ 53,000 Required: a. & b. Determine the amount of the annual lease payments as calculated by the lessor and the amount the lessee would record as a right-of-use asset and a lease liability, for…