On January 1, 20x1, Entity Y leases out an equipment to Entity X. Information on the lease is as follows: ease term 3 years Annual rent payable at the end of each year 100,000 nterest rate implicit in the lease 10% The lease provides for the transfer of ownership of the equipment to the lessee at the end of the lease term. How much is the gross nvestment on January 1, 20x1? Select the correct response: 300,000 500,000 200,000 400,000

On January 1, 20x1, Entity Y leases out an equipment to Entity X. Information on the lease is as follows: ease term 3 years Annual rent payable at the end of each year 100,000 nterest rate implicit in the lease 10% The lease provides for the transfer of ownership of the equipment to the lessee at the end of the lease term. How much is the gross nvestment on January 1, 20x1? Select the correct response: 300,000 500,000 200,000 400,000

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Concept explainers

Leasing

Leasing is a contractual arrangement in which someone (a lessee) pays the owner (or lessor) of a building, land, vehicle, or other asset for the use of that asset. The lease is the agreement between lessee and lessor.

Question

100%

On January 1, 20x1, Entity Y leases out an equipment to Entity X. Information on the lease is as follows:
Lease term 3 years
Annual rent payable at the end of each year 100,000
Interest rate implicit in the lease 10%
The lease provides for the transfer of ownership of the equipment to the lessee at the end of the lease term. How much is the gross
investment on January 1, 20x1?
Select the correct response:
O 300,000
500,000
200,000
400,000

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Aa.31.
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