On January 1, 2022. XYZ Lessee based equipment from QRS Manufacturing at a Price of $164,000. Bay

On January 1, 2022. XYZ Lessee based equipment from QRS Manufacturing at a Price of $164,000.

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Bay Manufacturing has a cost of $124,000 in the asset • Lease specifies 4 annual payments beginning January 1, 2022, and on each January 1 thereafter through 2025 The 4-year term ends on December 31, 2025 Bay Manufacturing estimates a useful life of 5 years Bay Manufacturing estimates a residual value of $25,000 . The residual value will be Guaranteed by the Lessee XYZ Lessee agrees that the equipment will be worth at lease $25,000 or more at the end of the lease term . There is no purchase option, and the equipment reverts back to the Lessor at the end of the 4-year period • The implicit rate on the lease is 5%, and XYZ Lessee is aware of that rate • Assume Straight Line Depreciation is used on the Right of Use Asset PVAD Factor, n=4, -5% 3.72325 PVAD Factor, n-5, 1-5% 454595 PV of $1 Factor, -4,5% 82270 PV of $1 Factor, n-5,5% 78353 What would be the Lease Payments that Bay Manufacturing Lessor would require from XYZ Lessee? O a $30,810 Ob $44.236 Ⓒ$35,000 Od $42.000 O $47.524 Bay Manufacturing has a cost of $124,000 in the asset • Lease specifies 4 annual payments beginning January 1, 2022, and on each January 1 thereafter through 2025 The 4-year term ends on December 31, 2025 Bay Manufacturing estimates a useful life of 5 years Bay Manufacturing estimates a residual value of $25,000 . The residual value will be Guaranteed by the Lessee XYZ Lessee agrees that the equipment will be worth at lease $25,000 or more at the end of the lease term . There is no purchase option, and the equipment reverts back to the Lessor at the end of the 4-year period • The implicit rate on the lease is 5%, and XYZ Lessee is aware of that rate • Assume Straight Line Depreciation is used on the Right of Use Asset PVAD Factor, n=4, -5% 3.72325 PVAD Factor, n-5, 1-5% 454595 PV of $1 Factor, -4,5% 82270 PV of $1 Factor, n-5,5% 78353 What would be the Lease Payments that Bay Manufacturing Lessor would require from XYZ Lessee? O a $30,810 Ob $44.236 Ⓒ$35,000 Od $42.000 O $47.524

Answer rating: 100% (QA)

d 42000 PV of Lease Payment ... View the full answer