Corporate Finance Assignment/ Professional Essay Writers
East Company leased a new machine from North Company on May 1, 2007, under a lease with the following information:
Lease term ………………………………………………………….10 years
Annual rental payable at beginning of each lease year …………….$40,000
Useful life of machine ………………………………………………12 years
Implicit interest rate …………………………………………………14%
Present value factor for an annuity of 1
in advance for 10 periods at 14% …………………………………..5.95
Present value factor for 1 for 10 periods at 14% ……………………0.27
East has the option to purchase the machine on May 1, 2017, by paying $50,000, which approximates the expected fair value of the machine on the option exercise date. On May 1, 2007, the East should record a capitalized lease asset of:
a. $251,500.
b. $238,000.
c. $224,500.
d. $198,000. Get FInance Help Today