A contract requires lease payments of $800 at the beginning of every month for 6 years. a. What is the present value of the contract if the lease rate is 3.50% compounded annually? Round to the nearest cent b. What is the present value of the contract if the lease rate is 3.50% compounded monthly? Give typing answer with explanation and conclusion
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A contract requires lease payments of $800 at the beginning of every month for 6 years.
a. What is the present value of the contract if the lease rate is 3.50% compounded annually?
Round to the nearest cent
b. What is the present value of the contract if the lease rate is 3.50% compounded monthly?
Give typing answer with explanation and conclusion
Step by step
Solved in 3 steps
- Owens Company leased equipment for 4 years at 50,000 a year with an option to renew the lease for 6 years at 2,000 per month or to purchase the equipment for 25,000 (a price considerably less than the expected fair value) after the initial lease term of 4 years. Why would this lease qualify as a finance lease?Use the information in RE20-6. However, assume that there is no bargain purchase option and that Montevallo guarantees the 20,000 estimated residual value at the end of the 10-year lease. Montevallo estimates that it is probable that it will have to pay 15,000 cash due to the residual value guarantee. Calculate the present value of the lease payments. Round your answer to the nearest dollar.A contract requires lease payments of $900 at the beginning of every month for 3 years. a. What is the present value of the contract if the lease rate is 5.75% compounded annually? Round to the nearest cent b. What is the present value of the contract if the lease rate is 5.75% compounded monthly? Round to the nearest cent
- A contract requires lease payments of $700 at the beginning of every month for 5 years. a. What is the present value of the contract if the lease rate is 3.25% compounded annually? Round to the nearest cent b. What is the present value of the contract if the lease rate is 3.25% compounded monthly?A contract requires lease payments of $700 at the beginning of every month for 4 years. a. what is the present value of the contract if the lease rate is 6.39% compounded annually? b .what is the present valaue of the contract if the lease rate is 6.39 % compounded daily? [ i need a and b]A contract requires lease payments of $ 900 at the beginning of every month for 6 years. What is the present value of the lease contract if the lease rate is 5.50% compounded annually? ( Please step by step answer)
- A lease valued at $21,000 requires payments of $1,763 at the beginning of every three months. If money is worth 5% compounded quarterly, what is the size of the final lease payment?A lease valued at 30000 requires payments of 4000 every three months. If the first payment is due 2 years after the lease was signed and interest is 12% compounded quarterly, what is the term of the lease?Payments on a four-year lease valued at $32,050 are to be made at the beginning of every six months. If interest is 7.3% compounded semi-annually, what is the size of the semi-annual payments?
- A new lease involves payments of $30,000 per year for 10 years. Payments are made at the end of each year with no residual value. The Interest rate is 12% compounded annually. how do you Compute the Present value of the minimum lease payments ?A finance lease agreement calls for quarterly lease payments of $5,376 over a 10-year lease term, with the firstpayment on July 1, the beginning of the lease. The annual interest rate is 8%. Both the present value of the leasepayments and the cost of the asset to the lessor are $150,000. What would be the amount of interest expense thelessee would record in conjunction with the second quarterly payment on October 1? What would be the amountof interest revenue the lessor would record in conjunction with the second quarterly payment on October 1?An operating lease calls for equal payments of $260,000, per year for 4 years followed by equal payments of $300,000 per year for an additional 4 years the lease covers a total of 8 years. The total expense related to the lease reported in the first year of the lease is what? A. 2,200,000 B. 260,000 C. 280,000 D. The present value of the lease payments times the effective interest rate.
