What is the present value of $4,900 per year at a discount rate of 10 percent if the first payment is received 6 years from now
1 answer:
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Answer:
the present value of the lease obligation for lease A will be $1,702,712.74 while the present value of lease B will be $1,764,741.73
Step-by-step explanation:
the present value of annual lease payment will be determined by discounting the total amount to be received from lease payment over years.
for lease A , Pv = A
= $200,000( 1 - (1+0.1)) / 0.1 = $1,702,712.74
for lease B , Pv = $220,000( 1 - (1+0.1)) / 0.1 = $1,764,741.73
the amount to be dicloased in the balance sheet at 31 december, 2018