Taylor's tractor-trailer rigs sell for $150,000. A customer wishes to buy a rig on a dease purchase plan over seven years, with the first payment to be made at the inception of the lease. Interest is at 12%. Required: a. Compute the amount of the annual lease payment and the gross amount (total payments) due under the lease. b. Compute the amount of interest income earned by Taylor's for the first year of the lease. Note: Use tables, Excel, or a financial calculator. (EV of $1. PV of $1. EVA of $1. PVA of $1. EVAD of $1 and PVAD of $1) a Annual lease payment a. Gross amount b. Interest income
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- Benning Manufacturing Company is negotiating with a customer for the lease of a large machine manufactured by Benning. The machine has a cash price of $800,000. Benning wants to be reimbursed for financing the machine at a 12% annual interest rate over the five-year lease term. Required: 1. Determine the required lease payment if the lease agreement calls for 10 equal semiannual payments beginning six months from the date of the agreement. 2. Determine the required lease payment if the lease agreement calls for 20 equal quarterly payments beginning immediately. 3. Determine the required lease payment if the lease agreement calls for 60 equal monthly payments beginning one month from the date of the agreement. The present value of an ordinary annuity factor for n 5 60 and i 5 1% is 44.9550.Taylor's tractor-trailer rigs sell for $150,000. A customer wishes to buy a rig on a fease purchase plan over seven years, with the first payment to be made at the inception of the lease. Interest is at 12%. Required: a. Compute the amount of the annual lease payment and the gross amount (total payments) due under the lease. b. Compute the amount of interest income earned by Taylor's for the first year of the lease. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) a. Annual lease payment a. Gross amount b. Interest incomeCallaway Golf Co. leases telecommunications equipment from Photon Company. Assume the following data for equipment leased from Photon Company. The lease term is 5 years and requires equal rental payments of $31,000 at the beginning of each year. The equipment has a fair value at the commencement of the lease of $150,000, an estimated useful life of 8 years, and a guaranteed residual value at the end of the lease of $15,500. Photon set the annual rental to earn a rate of return of 6%, and this fact is known to Callaway. The lease does not transfer title or contain a bargain purchase option, and is not a specialized asset. How should Callaway classify this lease?
- Bravo Manufacturing Company is negotiating with a customer for the lease of a large machine manufactured by Bravo. The machine has a cash price of $800,000. Bravo wants to be reimbursed for financing the machine at an 8% annual interest rate. Required: Determine the required lease payment if the lease agreement calls for 10 equal annual payments beginning immediately. Determine the required lease payment if the first of 10 annual payments will be made one year from the date of the agreement. Determine the required lease payment if the first of 10 annual payments will be made immediately and Bravo will be able to sell the machine to another customer for $50,000 at the end of the 10-year lease.Benning Manufacturing Company is negotiating with a customer for the lease of a large machine manufactured by Benning. The machine has a cash price of $800,000. Benning wants to be reimbursed for financing the machine at an 8% annual interest rate. Required: 1. Determine the required lease payment if the lease agreement calls for 10 equal annual payments beginning immediately. 2. Determine the required lease payment if the first of 10 annual payments will be made one year from the date of the agreement. 3. Determine the required lease payment if the first of 10 annual payments will be made immediately and Benning will be able to sell the machine to another customer for $50,000 at the end of the 10-year lease.McGee Leasing leased a car to a customer. McGee will receive $300 a month,at the end of each month, for 36 months. Use the PV function in Excel® to calculate the asnwers to the following questions1. What is the present value of the lease if the annual interest rate in the lease is 18%?2. What is the present value of the lease if the car can likely be sold for $6,000 at the end ofthree years?
- To lease the car then purchase at the end of the five-year lease. The purchase price is $19,894. The sales tax rate is 15%. The interest rate for leasing the car is 7.49%. The monthly lease payment, including the sales tax, is $324.70. The residual value of the vehicle at the end of the lease term is $8,296.85. Initial amount due at signing: First monthly payment. Based on the information above, calculate the following; a).Initial payment due at signing. b). Total of all monthly payments. c). Residual cost at conclusion of lease. This is what you pay if you decide to purchase the vehicle, so it will include sales tax. d). Total cost if you lease then purchase at the end of the five-year lease.A lease agreement that qualifies as a finance lease calls for annual lease payments of $40,000 over a six-year lease term (also the asset's useful life), with the first payment on January 1, the beginning of the lease. The interest rate is 7%. The lessor's fiscal year is the calendar year. The lessor manufactured this asset at a cost of $191,000. Required: a. Determine the price at which the lessor is "selling" the asset (present value of the lease payments). b. Create a partial amortization table through the second payment on January 1. Year 2 c. What would be the increase in earnings that the lessor would report in its income statement for the first year ended December 31 (ignore taxes)? Note: Use tables, Excel, or a financial calculator. (EV of $1. PV of $1. EVA of $1. PVA of $1. EVAD of $1 and PVAD of $1) Complete this question by entering your answers in the tabs below. Required A Required B Required C Determine the price at which the lessor is "selling the asset (present value of…A lease agreement that qualifies as a finance lease calls for annual lease payments of $30,000 over a four-year lease term (also the asset's useful life), with the first payment on January 1, the beginning of the lease. The interest rate is 8%. The lessor's fiscal year is the calendar year. The lessor manufactured this asset at a cost of $100,000. Required: Determine the price at which the lessor is "selling" the asset (present value of the lease payments). Create a partial amortization table through the second payment on January 1, Year 2. What would be the increase in earnings that the lessor would report in its income statement for the first year ended December 31 (ignore taxes)? Note: Use tables, Excel, or a financial calculator. (FV of S 1, PV of $1, FVA of $1, PVA of S1, FVAD of $1 and PVAD of $1)
- A lease agreement that qualifies as a finance lease calls for annual lease payments of $10,000 over a five-year lease term (also the asset's useful life), with the first payment on January 1, the beginning of the lease. The interest rate is 4%. The lessor's fiscal year is the calendar year. The lessor manufactured this asset at a cost of $30,000. Required: a. Determine the price at which the lessor is "selling" the asset (present value of the lease payments). b. Create a partial amortization table through the second payment on January 1, Year 2. c. What would be the increase in earnings that the lessor would report in its income statement for the first year ended December 31 (ignore taxes)? Note: Use tables, Excel, or a financial calculator. (FV of $1. PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Complete this question by entering your answers in the tabs below. Required A Required B Determine the price at which the lessor is "selling" the asset (present value of the…A lease agreement that qualifies as a finance lease calls for annual lease payments of $26,269 over a six-year lease term (also the asset’s useful life), with the first payment at January 1, the beginning of the lease. The interest rate is 5%. The lessor’s fiscal year is the calendar year. The lessor manufactured this asset at a cost of $125,000. What would be the increase in earnings that the lessor would report in its income statement for the year ended December 31(ignore taxes)?On January 1, Garcia Supply leased a truck for a four-year period, at which time possession of the truck will revert back to the lessor. Annual lease payments are $10,000 due on December 31 of each year, calculated by the lessor using a 5% discount rate. Negotiations led to Garcia guaranteeing a $36,000 residual value at the end of the lease term. Garcia estimates that the residual value after four years will be $35,000. What is the amount to be added to the right-of-use asset and lease liability under the residual value guarantee? Note: Use tables, Excel, or a financial calculator. Enter your answer in whole dollars. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)