A company signs a lease acquiring the right to use property for five years. Lease payments of $17156.31 are to be made annually at the end of this year and the next four years. The discount, or interest, rate is 8 percent per year. (Use factor table in Appendix B for calculation) Required 1: What is the present value of the lease payments? $ Required 2: In the first payment, what is the amount of interest cancelled? $ Required 3: In the second payment, what is the amount of lease paid net of interest? $ Required 4: In the last payment, what is the amount of interest cancelled? $ Required 5: Assume the lease contract has the option to buy the property for the present value of the remaining payments plus $50,000. If the company decides to buy the property at the end of the third year immediately before the third payment, how much it must pay in dollars at the end of period 3? $
A company signs a lease acquiring the right to use property for five years. Lease payments of $17156.31 are to be made annually at the end of this year and the next four years. The discount, or interest, rate is 8 percent per year. (Use factor table in Appendix B for calculation)
Required 1: What is the present value of the lease payments? $
Required 2: In the first payment, what is the amount of interest cancelled? $
Required 3: In the second payment, what is the amount of lease paid net of interest? $
Required 4: In the last payment, what is the amount of interest cancelled? $
Required 5: Assume the lease contract has the option to buy the property for the present value of the remaining payments plus $50,000. If the company decides to buy the property at the end of the third year immediately before the third payment, how much it must pay in dollars at the end of period 3? $
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