Question: Billit Corporation is considering leasing a machine to a client for five years. The machine sells for $100,000 cash. The incremental borrowing rate is 8%.

Billit Corporation is considering leasing a machine to a client for five years. The machine sells for $100,000 cash. The incremental borrowing rate is 8%. The implicit rate is unknown. Payments are quarterly and start at the commencement of the lease. What is the quarterly lease payment? Show your work.

Quarterly


Calculation of Initial Lease Liability:
Quarterly Payment
Non-Lease Component*
Minimum Lease Payment
Present Value Factor
Present Value of Mininum Lease Payment

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