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Glade Company leases computer equipment to customers under direct financing leases.  The equipment has no residual value at the end of the lease and the leases do no contain bargain purchase options.  Glade wishes to earn 8% interest on a 5-year lease of equipment with a cost of P3,234,000.  The present value of an annuity due of 1 at 8% for 5 years is 4.312.  On January 1, 2010, Glade Company leased the equipment to Blass Company.  What is the total interest revenue that Glade will earn over the lease term? a. 1,293,600 b. 1,394,500 c. 516,000 d. 750,000

Glade Company leases computer equipment to customers under direct financing leases.  The equipment has no residual value at the end of the lease and the leases do no contain bargain purchase options.  Glade wishes to earn 8% interest on a 5-year lease of equipment with a cost of P3,234,000.  The present value of an annuity due of 1 at 8% for 5 years is 4.312.  On January 1, 2010, Glade Company leased the equipment to Blass Company.  What is the total interest revenue that Glade will earn over the lease term? a. 1,293,600 b. 1,394,500 c. 516,000 d. 750,000

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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Glade Company leases computer equipment to customers under direct financing leases.  The equipment has no residual value at the end of the lease and the leases do no contain bargain purchase options.  Glade wishes to earn 8% interest on a 5-year lease of equipment with a cost of P3,234,000.  The present value of an annuity due of 1 at 8% for 5 years is 4.312.  On January 1, 2010, Glade Company leased the equipment to Blass Company.  What is the total interest revenue that Glade will earn over the lease term?

a. 1,293,600
b. 1,394,500
c. 516,000
d. 750,000

 

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