Shamrock Company leases an automobile with a fair value of $18,034 from Henneth Motors, Inc., on...

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Shamrock Company leases an automobile with a fair value of $18,034 from Henneth Motors, Inc., on the following terms. Non-cancelable term of 50 months. 1. 2. Rental of $370 per month (at the beginning of each month). (The present value at 0.5% per month is $16,414.) 3. Shamrock guarantees a residual value of $1,600 (the present value at 0.5% per month is $1,247). Shamrock expects the probable residual value to be $1,600 at the end of the lease term. 4. Estimated economic life of the automobile is 60 months. 5. Shamrock's incremental borrowing rate is 6% a year (0.50% a month). Kenneth's implicit rate is unknown. Shamrock Company leases an automobile with a fair value of $18,034 from Henneth Motors, Inc., on the following terms. Non-cancelable term of 50 months. 1. 2. Rental of $370 per month (at the beginning of each month). (The present value at 0.5% per month is $16,414.) 3. Shamrock guarantees a residual value of $1,600 (the present value at 0.5% per month is $1,247). Shamrock expects the probable residual value to be $1,600 at the end of the lease term. 4. Estimated economic life of the automobile is 60 months. 5. Shamrock's incremental borrowing rate is 6% a year (0.50% a month). Kenneth's implicit rate is unknown.

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To calculate the present value of the minimum lease payments and determine if the lease is a capital ... View the full answer