Nick mentions to James Hendrix, the president of Hendrix Leasing, that although the company will need the equipment for four years, he would like a lease contract for two ros61752_ch21_652-676.indd 675 8/10/15 4:39 PM 676 ??? PART V Long-Term Financing years instead. At the end of the two years, the lease could be renewed. Nick would also like to eliminate the security deposit, but he would be willing to increase the lease payments to $1,650,000 for each of the two years. When the lease is renewed in two years, Hendrix would consider the increased lease payments in the first two years when calculating the terms of the renewal. The equipment is expected to have a market value of $1.44 million in two years. 

What is the NAL of the lease contract under these terms? 

Why might Nick prefer this lease? 

What are the potential ethical issues concerning the new lease terms?

Answer rating: 100% (QA)

The value of the equipment after 2 years would be Book Value 3600000 36000003333 4445 799920 AfterTa... View the full answer