Subzero Warehouse, Inc. leased equipment from Northern Finance on January 1, 2021 with a fair value...
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Subzero Warehouse, Inc. leased equipment from Northern Finance on January 1, 2021 with a fair value of $450,000. The lease term is 4 years and requires equal rental payments at the beginning of each year. The equipment has an estimated useful life of 5 years, and a $50,000 guaranteed residual value. Northern Finance uses an interest rate of 4% to determine lease payments. The table below provides select present value factors. Present Value of a Single Sum 0.85480 (4%,4 Present Value of an Annuity Due 3.77509 (4%,4) Present Value of an Ordinary 3.62990 Annuity (4%,4) Present Value of a Single Sum 0.82193 (4%,5) Present Value of an Annuity Due 4.62990 (4%,5) Present Value of an Ordinary Annuity (4%,5) 4.45182 How much are the lease payments Northern Finance will require? Subzero Warehouse, Inc. leased equipment from Northern Finance on January 1, 2021 with a fair value of $450,000. The lease term is 4 years and requires equal rental payments at the beginning of each year. The equipment has an estimated useful life of 5 years, and a $50,000 guaranteed residual value. Northern Finance uses an interest rate of 4% to determine lease payments. The table below provides select present value factors. Present Value of a Single Sum 0.85480 (4%,4 Present Value of an Annuity Due 3.77509 (4%,4) Present Value of an Ordinary 3.62990 Annuity (4%,4) Present Value of a Single Sum 0.82193 (4%,5) Present Value of an Annuity Due 4.62990 (4%,5) Present Value of an Ordinary Annuity (4%,5) 4.45182 How much are the lease payments Northern Finance will require?
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Subzero Warehouse Lease Payment Calculation Lease Parameters Fair Value of Equipment 450000 Lease Term 4 years Residual Value 50000 Interest Rate 4 Ca... View the full answer
Related Book For
Intermediate Accounting IFRS
ISBN: 9781119607519
4th Edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield
Posted Date:
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