Homework Answers
Solutions:
| Lease Payments | Residual Value Guaranteed | PV of lease Payments | PV of Residual Value Guarantee | Right-To Use Asset |
| 18355 | 0 | 64000 | 0 | 64000 |
| 63698 | 0 | 333174 | 0 | 333174 |
| 17773 | 21000 | 75351 | 13648.53 | 89000 |
| 88546 | 38000 | 465351 | 15347.44 | 480699 |
Calculations:
| Situation 1 | Fair Value of the asset | 64000 |
| Lease Payments at the beginning of each of the next four years (64000/÷ 3.48685) | 18355 | |
| Situation 2 | Fair Value of the asset | 364000 |
| Less: PV of the residual value ($64000*.48166) | 30826.24 | |
| Amount to be recovered Through periodic lease payments | 333173.8 | |
| Lease Payments at the beginning of each of the next seven years ($333174÷ 5.23054) | 63698 | |
| Situation 3 | Fair Value of the asset | 89000 |
| Less: PV of the residual value ($21000*.64993) | 13648.53 | |
| Amount to be recovered Through periodic lease payments | 75351.47 | |
| Lease Payments at the beginning of each of the next five years ($75351÷ 4.23972) | 17773 | |
| Situation 4 | Fair Value of the asset | 479000 |
| Less: PV of the residual value ($33000*.40388) | 13648.53 | |
| Amount to be recovered Through periodic lease payments | 465351.5 | |
| Lease Payments at the beginning of each of the next eight years ($465352÷ 4.23972) | 88546 |
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