Textbook Problem

For which of the following transactions would the use of the present value of an annuity due concept be appropriate in calculating the present value of the asset obtained or liability owed at the date of incurrence?

1. a. A capital lease is entered into with the initial lease payment due 1 month subsequent to the signing of the lease agreement.
2. b. A capital lease is entered into with the initial lease payment due upon the signing of the lease agreement.
3. c. A 10-year, 8% bond is issued on January 2, with interest payable semiannually on July 1 and January 1, yielding 7%.
4. d. A 10-fear, 8% bond is issued on January 2, with interest payable semiannually on July 1 and January 1, yielding 9%.