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Zarrin [17]
3 years ago
9

Jansen Company leased a machine with a cost and fair value of $250,000 to Naylor Company. The machine will have no residual valu

e at the end of the 6-year lease. What will the six beginning-of-the-year lease payments be if the lessor’s implicit interest rate is 12%?
Business
1 answer:
Lapatulllka [165]3 years ago
5 0

Answer:

$54,291.45

Explanation:

Given:

Present value = $250,000

Duration, n = 6 years

Rate, r = 12%

Now,

\textup{Present value}=\textup{Annuity}\times([\frac{1-(1+r)^{-n}}{r}]\times(1+r))

on substituting the respective values, we get

\textup{250,000}=\textup{Annuity}\times([\frac{1-(1+0.12)^{-6}}{0.12}]\times(1+0.12))

or

\textup{Annuity}=\frac{250,000}{4.6047}

or

Annuity = $54,291.45

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