The correct answer is: c)
Step 1: Calculate the Present Value of the lease:
PMT = $12,000; N = 7; I = 7.5%*
Therefore, PV = 63,559
*Note that we have to use the lower of the lease rate or the rate on the firm's general debt.
Step 2: Amortization Rate = 63,559/7 = 9,080
Step 3: Ending Book Value = 63,559 - 9,080 = 54,479
Free info on financial certification exams including study guides, exam questions, and much more!
The correct answer is: b) Total Lease Payment = Interest expense + Principal repayment Step 1: Interest expense = 8.5% of ...
The correct answer is: A) Under the capitalized lease method, the lessee must treat the asset as if it was purchased with ...
Bond covenants can limit the amount of leases a company can have because leasing contracts are a form of debt. Taking on ...
Find out how and why lower interest rates for leasing new automobiles have helped spur more consumers to lease cars instead ...
Understand how the value of the real estate involved in a triple-net lease impacts the value of the lease both positively ...
A lease considered to have the economic characteristics of asset ...
A rental agreement that puts no obligation on the lessee (the ...
An accounting approach that identifies a company's lease obligation ...
An accounting term used to classify an asset on a company's balance ...
A financial ratio that measures how much a company uses leasing ...
The lowest amount that a lessee can expect to make on a lease ...