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.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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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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