shamrock co leases an automoblie with a fair value of $15,005 from John SImon Motors inc. on the following terms: 1) Non cancelable of 50 months 2) Rental $300 per month at the beginnin of each mont (the present value at 0.5% per month is $13,310) 3) Shamrock quarantees a residual value of $1,800 (the present value at 0.5% per month is 1,403). Delaney expects the probable residual value to be $1,800 at the end of the lease term 4) estimated economic life of the automobile is 60 months 5) shamrock's incremental borrowing rate is 6% a year (0.5% a month) Simon's implicit rate is unknown. Suppose that instead of $1,800 Shamrock expects the residual value to be only $500( the guaranteed amont is still $1,800) How does the calculation of the present value of the lease payments change from the part b?
shamrock co leases an automoblie with a fair value of $15,005 from John SImon Motors inc. on the following terms:
1) Non cancelable of 50 months
2) Rental $300 per month at the beginnin of each mont (the present value at 0.5% per month is $13,310)
3) Shamrock quarantees a residual value of $1,800 (the present value at 0.5% per month is 1,403). Delaney expects the probable residual value to be $1,800 at the end of the lease term
4) estimated economic life of the automobile is 60 months
5) shamrock's incremental borrowing rate is 6% a year (0.5% a month) Simon's implicit rate is unknown.
Suppose that instead of $1,800 Shamrock expects the residual value to be only $500( the guaranteed amont is still $1,800) How does the calculation of the present value of the lease payments change from the part b?
Part b was 300 x( pv 50 month 6%)44.37=13,310
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