A mortgage is the resource available to home providence to recover the loan.
A mortgage is defined as a legal agree between a bank/creditor with a a person or business. They lend money with an interest rate in exchange for having full ownership of the persons title (house/business building) if the person does not pay.
C: They charge extremely high interest rates.
Answer:
A) the lessee records an asset and a liability for the present value of lease payments.
Explanation:
In a finance lease, the lessee business must estimate the present value of its obligations under the lease contract (using the lease's interest rate as the discount rate) and record it in the balance sheet as:
- a debit entry under the fixed asset account
- a credit entry under the capital lease liability account
Answer:
the second option
Explanation:
Present value is the sum of discounted cash flows
Present value can be calculated using a financial calculator
first option
Cash flow in year 1 and 2 - $85,000
1 = 7
PV = $153,681.54
Second option
Cash flow in year 0 = $20,000
Cash flow in year 1 and 2- $74,000
I = 7
PV = $153,793.34
the pv of the second payment is higher than the first so the seconf would be choosen
To find the PV using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
153,681.54