Casio Corp. manufactured a gold-plated, diamond-studded calculator for Justin Beiber's new job as an auditor at PW-KPM-E&D.
Question:
Casio Corp. manufactured a gold-plated, diamond-studded calculator for Justin Beiber's new job as an auditor at PW-KPM-E&D. The calculator cost $3.5 million to manufacture and Casio wants to earn a gross profit margin from the sale of the calculator of 20%. Casio leased the calculator using a 16-year lease (Justin is going for partner so he will be there a long time) with semi-annual lease payments. The first lease payment is due at the lease inception date. Casio has a required rate of return (for interest) of 6%. They expect that the calculator will be worth $.5 million at the end of the lease, but the residual value is not guaranteed. What is the lease payment amount that Casio uses for this lease?
Advanced Financial Accounting
ISBN: 978-0137030385
6th edition
Authors: Thomas Beechy, Umashanker Trivedi, Kenneth MacAulay