Chapter 6, Problem 6.13BE

To determine

Present Value:

The value of today’s amount to be paid or received in the future at a compound interest rate is called as present value. The following formula is used to calculate the present value of an amount:

$\text{Present value of an amount = }\frac{\text{Future value}}{{\left(\text{1 + interest rate}\right)}^{\text{number}\text{of}\text{periods}}}$

Present value of an annuity due:

For the present value of an annuity due, the same formula of an ordinary annuity is used expect the amount of immediate cash flow, which is added to the present value of the future periodic cash flows which are remaining.

To determine: At what amount should F record the lease liability on September 30, 2016, before the first payment is made.