Amaya Leasing acquires equipment and leases it to customers under long-term sales-type leases. Amaya earns interest under these arrangements at a 8% annual rate. Amaya leased a machine it purchased for $800,000 under an arrangement that specified annual payments beginning at the commencement of the lease for four years. The lessee had the option to purchase the machine at the end of the lease term for $300,000 when it was expected to have a residual value of $360,000.

Calculate the amount of the annual lease payments.

Note: Use tables, Excel, or a financial calculator. Enter amounts rounded to the nearest whole dollar. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)

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10 points eBook Print References Mc Graw Hill Alayd ising acqu ases it LO s-type leases. Amaya earns interest under these arrangements at a 8% annual rate. Amaya leased a machine it purchased for $800,000 under an arrangement that specified annual payments beginning at the commencement of the lease for four years. The lessee had the option to purchase the machine at the end of the lease term for $300,000 when it was expected to have a residual value of $360,000. Calculate the amount of the annual lease payments. Note: Use tables, Excel, or a financial calculator. Enter amounts rounded to the nearest whole dollar. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Table or calculator function: Purchase Option Table or calculator function: Amount to be recovered (fair value) Purchase option Amount to be recovered through periodic lease payments Lease Payment Amount of fair value recovered each lease payment < Prev n = 9 of 11 j= n = j= $ Present Value 4 8% Next > 800,000 Lease Payments 10 points eBook Print References Mc Graw Hill Alayd ising acqu ases it LO s-type leases. Amaya earns interest under these arrangements at a 8% annual rate. Amaya leased a machine it purchased for $800,000 under an arrangement that specified annual payments beginning at the commencement of the lease for four years. The lessee had the option to purchase the machine at the end of the lease term for $300,000 when it was expected to have a residual value of $360,000. Calculate the amount of the annual lease payments. Note: Use tables, Excel, or a financial calculator. Enter amounts rounded to the nearest whole dollar. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Table or calculator function: Purchase Option Table or calculator function: Amount to be recovered (fair value) Purchase option Amount to be recovered through periodic lease payments Lease Payment Amount of fair value recovered each lease payment < Prev n = 9 of 11 j= n = j= $ Present Value 4 8% Next > 800,000 Lease Payments

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To calculate the amount of the annual lease payments we need to consider the fair value of the equip... View the full answer