Oxana Electronics is a financing business, leasing equipment to various entities. It acquired an equipment for a cost of P2,300,000. It immediately leased the equipment to Sushmita & Co. on January 1, 2020. Lease term is 6 years, and after the end of the lease term, title will transfer to the lessee. Annual lease payments are made at the start of each year, starting January 1, 2020. The machine’s residual value is P200,000. Implicit rate of the lease is 12%. Below PV factors are provided in relation to the implicit rate: · PV of annuity in advance at 12% for 6 periods: 4.60 · PV of 1 at 12% for 6 periods: 0.51 How much is the annual rental? a. 477,826 b. 500,000 c. 559,610 d. 460,000
Oxana Electronics is a financing business, leasing equipment to various entities. It acquired an equipment for a cost of P2,300,000. It immediately leased the equipment to Sushmita & Co. on January 1, 2020. Lease term is 6 years, and after the end of the lease term, title will transfer to the lessee. Annual lease payments are made at the start of each year, starting January 1, 2020. The machine’s residual value is P200,000. Implicit rate of the lease is 12%. Below PV factors are provided in relation to the implicit rate: · PV of annuity in advance at 12% for 6 periods: 4.60 · PV of 1 at 12% for 6 periods: 0.51 How much is the annual rental? a. 477,826 b. 500,000 c. 559,610 d. 460,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Oxana Electronics is a financing business, leasing equipment to various entities. It acquired an equipment for a cost of P2,300,000. It immediately leased the equipment to Sushmita & Co. on January 1, 2020. Lease term is 6 years, and after the end of the lease term, title will transfer to the lessee. Annual lease payments are made at the start of each year, starting January 1, 2020. The machine’s residual value is P200,000. Implicit rate of the lease is 12%. Below PV factors are provided in relation to the implicit rate:
· PV of annuity in advance at 12% for 6 periods: 4.60
· PV of 1 at 12% for 6 periods: 0.51
How much is the annual rental?
· PV of annuity in advance at 12% for 6 periods: 4.60
· PV of 1 at 12% for 6 periods: 0.51
How much is the annual rental?
a. 477,826
b. 500,000
c. 559,610
d. 460,000
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