On January 1, 2021 Richmond Leasing corporation, a public company leased an equipment with a fair value of $100,000 and a cost of $90,000 to Alpha Inc. the following information relates to the agreement: - Rental payments are due on January 1 of each year. - The lease term is for 5 years (with no renewal), - The asset economic life is 7 years - There is an unguaranteed residual value (URV) of $4,000. The VP finance asked how much the annual lease rent should be to ensure a 9% return rate? Select one: a. $20,615. b. $16,007. c. $22,973. d. $23,586.
On January 1, 2021 Richmond Leasing corporation, a public company leased an equipment with a fair value of $100,000 and a cost of $90,000 to Alpha Inc. the following information relates to the agreement: - Rental payments are due on January 1 of each year. - The lease term is for 5 years (with no renewal), - The asset economic life is 7 years - There is an unguaranteed residual value (URV) of $4,000. The VP finance asked how much the annual lease rent should be to ensure a 9% return rate? Select one: a. $20,615. b. $16,007. c. $22,973. d. $23,586.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 1, 2021 Richmond Leasing corporation, a public company leased an equipment with a fair value of $100,000 and a cost of $90,000 to Alpha Inc. the following information relates to the agreement:
- Rental payments are due on January 1 of each year.
- The lease term is for 5 years (with no renewal),
- The asset economic life is 7 years
- There is an unguaranteed residual value (URV) of $4,000.
The VP finance asked how much the annual lease rent should be to ensure a 9% return rate?
Select one:
a.
$20,615.
b.
$16,007.
c.
$22,973.
d.
$23,586.
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