Present and future value tables of $1 at 11% are presented below. PV of $1 FV of $1 PVA of $1 FVA of $1 1 0.90090...

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Present and future value tables of $1 at 11% are presented below. PV of $1 FV of $1 PVA of $1 FVA of $1 1 0.90090 1.11000 0.9

Titanic Corporation leased executive limousines under terms of $20,000 to be paid at the inception of the lease, and four equ

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Answer 1

Answer #1

Solution: The answer is $10,238.

Reason:

1)Interest expenses is calculated on present value of future payments

2) In this question, it is given that there is an initial payment of $20,000 and 4 equal installment of $30,000 will be paid in 4 years time.

3) Interest expense = ( Annual Installments * PVA of $1 for 4 years) * 11%

( $30,000 * 3.10245)* 11% = $10,238 Approx

Remaining options are not correct.

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Answer 2

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