Lend Car Company buys cars and sells them at a markup of 20% above cost. On January 1, 2020, Lend purchased a vehicle for $40,000 and the client is making 6 annual lease payments of $10,000 (assume it includes 10% interest). The vehicle has a useful life of 6 years and is worthless. residual The first payment is due immediately What is the increase in income (gross profit and interest) for Lend for the year 2020 as a result of this lease? A) 10,000 B) 11,200 C) 12,600. D) 11,800
Lend Car Company buys cars and sells them at a markup of 20% above cost. On January 1, 2020, Lend purchased a vehicle for $40,000 and the client is making 6 annual lease payments of $10,000 (assume it includes 10% interest). The vehicle has a useful life of 6 years and is worthless. residual The first payment is due immediately What is the increase in income (gross profit and interest) for Lend for the year 2020 as a result of this lease?
- A) 10,000
- B) 11,200
- C) 12,600.
- D) 11,800
Lease is a contract between lessor and lessee wherein an asset is given to lessee in consideration of periodical payments,
Lessee paid periodical payment called as lease payment, but if the asset is given in an arrangement of hire purchase then buyer must paid installment which includes a portion of Interest.
Interest is calculated on maximum outstanding balance.
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