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anastassius [24]
3 years ago
11

Latting Corporation has entered into a 7 year lease for a building it will use as a warehouse. The annual payment under the leas

e will be $4,781. The first payment will be at the end of the current year and all subsequent payments will be made at year-ends. If the discount rate is 6%, the present value of the lease payments is closest to:
Business
1 answer:
dsp733 years ago
7 0

Answer:

The completely stated  question and the multiple-choice answers include:

Latting Corporation has entered into a 7-year lease for a building it will use as a warehouse. The annual payment under the lease will be $4,781. The first payment will be at the end of the current year and all subsequent payments will be made at year-end. If the discount rate is 6%, the present value of the lease payments is closest to:  

A. $31,573

B. $22,257

C. $33,467

D. $26,688

The correct answer is: $26,688 (D)

Explanation:

First of all, we have to calculate the Present Value Interest Factor of an Annuity (PVIFA), which is the factor that can be used to calculate a series of annuities.  The formula for PVIFA is given by:

PVIFA = \frac{1-(1+r)^{-n} }{r}

where:

r = interest rate per period

n = number of periods.

There are also existing PVIFA tables for already calculated PVIFA at different interest rates per period, and at a periodic interest (discount) rate of 6% for 7 years, the PVIFA = 5.5824

Therefore the Present value is calculated thus:

Annual payments × PVIFA for 7 years at 6%

4,781 × 5.5824  (refer to the PVIFA table)

= 26,689.45 (closest to 26,688)

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Shankar Company uses a perpetual system to record inventory transactions. The company purchases 1,500 units of inventory on acco
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Answer:

February 2

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When an item is purchased, such purchase may be done by cash or on  account, the entries required are

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When a return of the item purchased is done,

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Amount returned = $40 * 100

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6 0
3 years ago
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Sever21 [200]

Answer:

(D) I, II, and III

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1. Financial information which the customer supplies must be verified by the broker/dealer within 15 days after the account has been approved for options transactions.

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3 0
3 years ago
What is the difference between being overstaffed and overhired
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Overstaffed is "having more members of staff than are necessary" and overhired is "hiring too many employees".
6 0
3 years ago
AB Corporation and YZ Corporation formed a partnership to construct a shopping mall. AB contributed $527,000 cash, and YZ contri
Vaselesa [24]

Answer:

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AB's basis in the partnership's interests = $527,000 + ($263,500/2) = $658,750

YZ's basis in the partnership's interests = $457,000 + ($263,500/2) = $588,750

Each partner share 50% interest in the recourse debt.

b. AB is a general partner, and YZ is a limited partner.

AB's basis in the partnership's interests = $527,000 + $263,500 = $790,500

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5 0
2 years ago
Sunland Company has outstanding 500000 shares of $2 par common stock and 150000 shares of no-par 7% preferred stock with a state
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Answer:

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5 0
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