A firm leases equipment under a long-term finance lease (analogous to an installment purchase) that calls for 10 annual payments of $50,000
A firm leases equipment under a long-term finance lease (analogous to an installment purchase) that calls for 10 annual payments of $50,000. The first payment is due at the inception of the lease. The annual rate on the lease is 3%. What is the value of the leased asset at inception of the lease?
(Do not add dollar sign; do not add comma to your amount; round the answer to the whole number)
Homework Answers
Annual rental payments = $50000
Effective rate of interest =3%
Present value annuity due factor, 3%, 10 periods = 8.78611
Value of the leased asset :
= Annual rental payments x annuity due factor at 3%, 10 periods
Value of leased asset at inception = 50000x8.78611
= 439306
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A firm leases equipment under a long-term finance lease (analogous to an installment purchase) that calls for 10 annual payments of $50,000
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