Question: Situation 1 2 3 Lease term ( years ) 4 4 3 Lessor's rate of return 1 0 % 1 1 % 9 % Fair

Situation123Lease term (years)443Lessor's rate of return10%11%9%Fair value of leased asset$ 100,000$ 440,000$ 205,000Lessor's cost of leased asset$ 70,000$ 440,000$ 165,000Purchase option:Exercise price$ 30,000$ 70,000$ 42,000Exercisable at end of year:442Reasonably certain?yesnoyes

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