Homework Answers
| Formula to calculate present value of lease payment | ||||||||||
| Present value | Lease payment*(1-((1+r)^-n))/r | |||||||||
| where r is discount rate and n is number of payments | ||||||||||
| Present value | 12000*(1-((1.10^-4)/0.10) | |||||||||
| Present value | 12000*3.169865 | |||||||||
| Present value | $38,038.32 | |||||||||
| Thus, amount used to capitalized lease equipment is $38,038.32 | ||||||||||
| The net annual cash flow is received for next 7 years and amount received each year is equal | ||||||||||
| The discount rate given is 8% | ||||||||||
| Thus, in this case present value of annuity table with interest rate of 8% and number of payments of 7 should be used. | ||||||||||
| Thus, correct answer is PV of annuity table, n=7, i=8% | ||||||||||
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Silverberg Company has just signed a capitalizable lease contract for equipment that requires rental payments of $...
Silverberg Company has just signed a capitalizable lease contract for equipment that requires rental payments of...
Silverberg Company has just signed a capitalizable lease contract for equipment that requires rental payments of $12,000 each, to be paid at the end of each of the next 4 years. The company's discount rate is 10%. What is the amount used to capitalize the leased equipment (i.e. the present value of the lease payments)?
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Silverberg Manufacturing is considering investing $90,000 in a new piece of machinery that will generate net...
Silverberg Manufacturing is considering investing $90,000 in a new piece of machinery that will generate net annual cash flows of $40,000 each year for the next 4 years. The machine has a salvage value of $15.000 at the end of its 4 year useful life. Silverberg's cost of capital and discount rate is 6%. Which of the following tables and criteria should we use to discount the salvage value of the equipment? OPV of annuity table, n=4, i=6% O PV...
Silverberg Manufacturing is considering investing $90,000 in a new piece of machinery that will generate net annual cas...
Silverberg Manufacturing is considering investing $90,000 in a new piece of machinery that will generate net annual cash flows of $40,000 each year for the next 4 years. The machine has a salvage value of $15,000 at the end of its 4 year useful life. Silverberg's cost of capital and discount rate is 6%. Which of the following tables and criteria should we use to discount the net annual cash flow? PV of annuity table, n 1, i-6% PV of...
On January 1, 2018, Diana Corporation (a lessor) signed to lease a machinery for eight-year. The...
On January 1, 2018, Diana Corporation (a lessor) signed to lease a machinery for eight-year. The lease was noncancellable. The terms of the lease called for Diane to make annual payments of $220,000 starting January 1, 2019 for eight years with the title reverting to the Diana at the end of the lease term. The contract stated that Diane guaranteed the residual value of the machine is $10,000 upon end of lease term. The machinery originally costed Diana $750,000, has...
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Johnson Manufacturing is considering investing $80,000 in a new piece of machinery that will generate net annual cash fl...
Johnson Manufacturing is considering investing $80,000 in a new piece of machinery that will generate net annual cash flows of $30,000 each year for the next 7 years. The machine has a salvage value of $10,000 at the end of its 7 year useful life. Johnson's cost of capital and discount rate is 8%. What is the dollar amount that we would multiply the factor by when using the PV of an Annuity table?
Sandhill, Inc. leased equipment from Tower Company under a 4-year lease requiring equal annual payments of...
Sandhill, Inc. leased equipment from Tower Company under a 4-year lease requiring equal annual payments of $304152, with the first payment due at lease inception. The lease does not transfer ownership, nor is there a bargain purchase option. The equipment has a 4-year useful life and no salvage value. Sandhill, Inc.’s incremental borrowing rate is 10% and the rate implicit in the lease (which is known by Sandhill, Inc.) is 7%. Assuming that this lease is properly classified as a...
help Pharoah Company has purchased equipment that requires annual payments of $85000 to be paid at...
help
Pharoah Company has purchased equipment that requires annual payments of $85000 to be paid at the end of each of the next 5 years. The appropriate discount rate is 6%. What amount will be used to record the equipment? • $425000 O $358051 $410772 $360650
McClintock Company has just signed a capitalizable lease contract for equipment that requires rental payments of $4,000 each, to be paid at the end of each of the next 6 years. The company's discount rate is 10%. What is the amount used to capitalize the leased equipment (i.e. the present value of the lease payments)? $ 24,000.00 $ 104,526.24 A 17,421.04 $ 2,257.88
Silverberg Manufacturing is considering investing $90,000 in a new piece of machinery that will generate net annual cash flows of $40,000 each year for the next 4 years. The machine has a salvage value of $15.000 at the end of its 4 year useful life. Silverberg's cost of capital and discount rate is 6%. Which of the following tables and criteria should we use to discount the salvage value of the equipment? OPV of annuity table, n=4, i=6% O PV...
Silverberg Manufacturing is considering investing $90,000 in a new piece of machinery that will generate net annual cash flows of $40,000 each year for the next 4 years. The machine has a salvage value of $15,000 at the end of its 4 year useful life. Silverberg's cost of capital and discount rate is 6%. Which of the following tables and criteria should we use to discount the net annual cash flow? PV of annuity table, n 1, i-6% PV of...
Blossom, Inc. leased equipment from Tower Company under a 4-year lease requiring equal annual payments of $324152, with the first payment due at lease inception. The lease does not transfer ownership, nor is there a bargain purchase option. The equipment has a 4-year useful life and no salvage value. Blossom, Inc.'s incremental borrowing rate is 11% and the rate implicit in the lease (which is known by Blossom, Inc.) is 8%. Assuming that this lease is properly classified as a...
help
Pharoah Company has purchased equipment that requires annual payments of $85000 to be paid at the end of each of the next 5 years. The appropriate discount rate is 6%. What amount will be used to record the equipment? • $425000 O $358051 $410772 $360650
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