On December 31, 2019, Metlock Corporation signed a 5-year, non-cancelable lease for a machine. The terms of the lease called for Metlock to make annual payments of $8,176 at the beginning of each year of the lease, starting December 31, 2019. The machine has an estimated useful life of 6 years and a $5,000 unguaranteed residual value. The machine reverts back to the lessor at the end of the lease term. Metlock uses the straight-line method of depreciation for all of its plant assets. Metlock's incremental borrowing rate is 5%, and the lessor's implicit rate is unknown.
On December 31, 2019, Metlock Corporation signed a 5-year, non-cancelable lease for a machine. The terms of the lease called for Metlock to make annual payments of $8,176 at the beginning of each year of the lease, starting December 31, 2019. The machine has an estimated useful life of 6 years and a $5,000 unguaranteed residual value. The machine reverts back to the lessor at the end of the lease term. Metlock uses the straight-line method of depreciation for all of its plant assets. Metlock's incremental borrowing rate is 5%, and the lessor's implicit rate is unknown.
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:Compute the present value of the lease payments. (For calculation purposes, use 5 decimal places as displayed in the factor table
provided and round final answer to O decimal places eg. 5,275.)
Present value of the lease payments
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Transcribed Image Text:On December 31, 2019, Metlock Corporation signed a 5-year, non-cancelable lease for a machine. The terms of the lease called for
Metlock to make annual payments of $8,176 at the beginning of each year of the lease, starting December 31, 2019. The machine has
an estimated useful life of 6 years and a $5,000 unguaranteed residual value. The machine reverts back to the lessor at the end of the
lease term. Metlock uses the straight-line method of depreciation for all of its plant assets. Metlock's incremental borrowing rate
is 5%, and the lessor's implicit rate is unknown.
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