Taylor's tractor-trailer rigs sell for $160,000. A customer wishes to buy a rig on a lease purchase plan over six years, with the first payment to be made at the inception of the lease. Interest is at 12%. Required: a. Compute the amount of the annual lease payment and the gross amount (total payments) due unde the lease. b. Compute the amount of interest income earned by Taylor's for the first year of the lease. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) a. Annual lease payment a. Gross amount b. Interest income

Taylor's tractor-trailer rigs sell for $160,000. A customer wishes to buy a rig on a lease purchase plan over six years, with the first payment to be made at the inception of the lease. Interest is at 12%. Required: a. Compute the amount of the annual lease payment and the gross amount (total payments) due unde the lease. b. Compute the amount of interest income earned by Taylor's for the first year of the lease. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) a. Annual lease payment a. Gross amount b. Interest income

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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

aj.2

Taylor's tractor-trailer rigs sell for $160,000. A customer wishes to buy a rig on a lease purchase plan over
six years, with the first payment to be made at the inception of the lease. Interest is at 12%.
Required:
a. Compute the amount of the annual lease payment and the gross amount (total payments) due unde
the lease.
b. Compute the amount of interest income earned by Taylor's for the first year of the lease.
Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and
PVAD of $1)
a. Annual lease payment
a. Gross amount
b. Interest income

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