Answer:
James Industries
The amount of the annual lease payments is:
= $207,878.86.
Explanation:
a) Data and Calculations:
Cost of equipment = $830,000
Normal sales price = $830,000
Residual value after 5 years = $200,000
Interest rate = 8%
Lease period = 5 years
From an online financial calculator:
Loan Amount 830000
Loan Term 5 years
Interest Rate 8
Results:
Payment Every Year $207,878.86
Total of 5 Payments $1,039,394.29
Total Interest $209,394.29
Lease Payment Schedule:
Period PV PMT Interest FV
1 $830,000.00 $-207,878.86 $66,400.00 $-688,521.14
2 $688,521.14 $-207,878.86 $55,081.69 $-535,723.98
3 $535,723.98 $-207,878.86 $42,857.92 $-370,703.04
4 $370,703.04 $-207,878.86 $29,656.24 $-192,480.42
5 $192,480.42 $-207,878.86 $15,398.43 $0.00
