Hi,

I need help solving the question in the file attached. some explanation will be highly appreciated.

thank you

Question #3 The lease payments from footnote disclosures of an operating lease Year Lease payments ($) 1. 2. 3. Year 4 and after 550 484 330 1650 Assume a 10% discount rate and a tax rate of 40%. Required: a. Compute Remaining Life of the lease. (1 mark) b. Compute the PV of lease payments for the first 3 years PV for year 4 and thereafter, use the annuity formula 1 n 1 ( ) 1 r r . Show that the PV of all the lease payments is $2088 (6 marks) c. Complete the B/S and I/S figures Balance Sheet Effects (3 marks) Reported TA $7,176 TL 184 TE 6,992 Adjustment Adjusted Income Statement Effects (6 marks) Reported Adjustment Adjusted NOI INT(1-tax rate) NI $500 75 $425 d. Reported Adjusted FLE (TL/TE) (3 marks) Use your results to explain why lessees prefer the operating lease method to the capital/finance lease method