Michael Morris is presently leasing a small business computer from Ivanhoe Office Equipment Company. The lease...
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Michael Morris is presently leasing a small business computer from Ivanhoe Office Equipment Company. The lease requires 10 annual payments of $9,000 at the end of each year and provides the lessor (Ivanhoe) with an 9% return on its investment. Use the following 9% interest factors: Future Value of 1 Present Value of 1 Future Value of Ordinary Annuity of 1 Present Value of Ordinary Annuity of 1 Present Value of an Annuity Due of 1 9 Periods 2.17189 0.46043 13.02104 5.99525 6.53482 10 Periods 2.36736 0.42241 15.19293 6.41766 6.99525 11 Periods 2.58043 0.38753 17.56029 6.80519 7.41766 (a) Assuming the computer has a ten-year life and will have no salvage value at the expiration of the lease, what was the original cost of the computer to Ivanhoe? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.) Michael Morris is presently leasing a small business computer from Ivanhoe Office Equipment Company. The lease requires 10 annual payments of $9,000 at the end of each year and provides the lessor (Ivanhoe) with an 9% return on its investment. Use the following 9% interest factors: Future Value of 1 Present Value of 1 Future Value of Ordinary Annuity of 1 Present Value of Ordinary Annuity of 1 Present Value of an Annuity Due of 1 9 Periods 2.17189 0.46043 13.02104 5.99525 6.53482 10 Periods 2.36736 0.42241 15.19293 6.41766 6.99525 11 Periods 2.58043 0.38753 17.56029 6.80519 7.41766 (a) Assuming the computer has a ten-year life and will have no salvage value at the expiration of the lease, what was the original cost of the computer to Ivanhoe? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.)
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SOLUTION To calculate the cost of leasing the computer we can use the present value of an annuity f... View the full answer
Related Book For
Advanced Financial Accounting
ISBN: 978-0137030385
6th edition
Authors: Thomas Beechy, Umashanker Trivedi, Kenneth MacAulay
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