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grin007 [14]
3 years ago
6

Jagadison Co. leases computer equipment to customers under sales-type leases. The equipment has no residual value at the end of

the lease and the leases do not contain purchase options. Jagadison desires a return of 12% interest on a five-year lease of equipment with a fair value of $989,065.Jagadison Co. leases computer equipment to customers under sales-type leases. The equipment has no residual value at the end of the lease and the leases do not contain purchase options. Jagadison desires a return of 12% interest on a five-year lease of equipment with a fair value of $989,065.
Required:
What is the total amount of interest revenue that Jagadison will earn over the life of the lease?
Business
1 answer:
Rasek [7]3 years ago
7 0

Answer: $235,844

Explanation:

Interest revenue = Total lease payments - Fair value of equipment

The lease payments are constant and so are an annuity and will be an annuity due because the first lease payment of such leases are made immediately.

Present value of lease payments = Annuity * Present value factor of Annuity due, 5 years, 12%

989,065 = Annuity * 4.0373

Annuity = 989,065 / 4.0373

= $244,981.79

Total lease payments = Lease payments * number of years

= 244,981.79 * 5

= $1,224,908.95

Interest revenue = 1,224,908.95 - 989,065

= $235,843.95

= $235,844

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The correct option of this question is (B). Explanation of this answer is given below in the explanation section

Explanation:

(B) is Correct Option:

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Why other options are not correct

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(C) Compile and keep personnel records. Record data for each employee, such as address, weekly earnings, absences, amount of sales or production, supervisory reports on ability, and date of and a reason for termination is also a responsibility of the HRM and sales department. However, it is noted some responsibility such as employee record management is the sole responsibility of the HRM department and HRM manager. But termination of an employee, absence recording, amount of sales or production are the responsibility of other departments such as the administrative department, sales department, and marketing department, etc. However, this option is also correct in a sense only if employee management involved, otherwise, this option is not correct.

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The following production data were taken from the records of the Finishing Department for July: Inventory in process, July 1, 40
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Answer:

Please refer explanation

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