Ferryland Inc. is leased in perpetuity at $ 11250 due at the beginning of each month. If the money is worth 11.5% compounded monthly, what is the value of the lease? a) $1,120,741.32 b) $1,185,163.04 c) $1,132,412.02 d) $1,175,235.33

Ferryland Inc. is leased in perpetuity at $ 11250 due at the beginning of each month. If the money is worth 11.5% compounded monthly, what is the value of the lease? a) $1,120,741.32 b) $1,185,163.04 c) $1,132,412.02 d) $1,175,235.33

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter11: Notes, Bonds, And Leases

Section: Chapter Questions

Problem 9Q

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On August 1, 2019, Kern Company leased a machine to Day Company for a 6-year period requiring payments of 10,000 at the beginning of each year. The machine cost 40,000 and has a useful life of 8 years with no residual value. Kerns implicit interest rate is 10%, and present value factors are as follows: Present value for an annuity due of 1 at 10% for 6 periods4.791 Present value for an annuity due of 1 at 10% for 8 periods5.868 Kern appropriately recorded the lease as a sales-type lease. At the inception of the lease, the Lease Receivable account balance should be: a. 60,000 b. 58,680 c. 48,000 d. 47,910
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