Faye Company leases computer equipment to customers under direct financing lease. The equipment has no residual value at the end of the lease and the leases do not contain bargain purchase options. Faye wishes to earn 8% interest on a five-year lease of equipment with a fair value of P323,400. The present value of an annuity due of P1 at 8% for five years is 4.312. What is the total amount of interest that Faye will earn over the life of the lease? A. P51,600 B. P75,000 C. P60,000 D. P55,000
Faye Company leases computer equipment to customers under direct financing lease. The equipment has no residual value at the end of the lease and the leases do not contain bargain purchase options. Faye wishes to earn 8% interest on a five-year lease of equipment with a fair value of P323,400. The present value of an annuity due of P1 at 8% for five years is 4.312. What is the total amount of interest that Faye will earn over the life of the lease? A. P51,600 B. P75,000 C. P60,000 D. P55,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Faye Company leases computer equipment to customers under direct
financing lease. The equipment has no residual value at the end of the
lease and the leases do not contain bargain purchase options. Faye wishes
to earn 8% interest on a five-year lease of equipment with a fair value of
P323,400. The present value of an annuity due of P1 at 8% for five years is
4.312. What is the total amount of interest that Faye will earn over the life
of the lease?
A. P51,600
B. P75,000
C. P60,000
D. P55,000
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