On January 1, 2021, a company signs a 25-year lease for land. Annual payments of $20,000 begin on December 31, 2021. The company
1 answer:
Answer:
Equipment 255,667 debit
Lease Liability 255,667 credit
Explanation:
The company will post the equiptment int accounting as the same value of the discounted lease payment.
C 20,000
time 25
rate 0.06
PV $255,667.1232
On each year-end the company will recognize the interest expense and the payment of 20,000 dollars
By the end of the lease, there will be no lease liability as all payment were made
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Answer:
Answer is explained in the explanation section.
Explanation:
Note: First of all, this question is incomplete and lacks necessary data to calculate this question. However, I have found the similar question on the internet with complete data given. Additionally, I have shared that data as well in the attachment below for your convenience, Thanks.
Solution:
SD = Standard Deviation
Using utility function, E(R) = Rp - 0.005 x A x = 1.34 - 0.005 x 3x
Using utility function, E(R) = 1.093%
If the weight in the risky portfolio is let's say, "a" then,
weight in the risk-free asset = 1 - a
So,
E(R) = a x Rp + (1 - a) x Rf
1.093% = a x 1.34% + (1 - a) x 0.50%
Solving for "a"
a = 70.56% - weight in risky portfolio
and 1 - a = 29.44% - weight in risk-free asset.
Similarly, if you want a return of 1.10%,
we can follow the above steps and get
1.1% = a x 1.34% + (1 - a) x 0.5%
Weight in risky portfolio,
a = 71.43%
weight in risk-free asset,
1 - a = 28.57%
