Homework Answers
| Formula to calculate present value of lease payment | ||||||||||
| Present value | Lease payment*(1-((1+r)^-n))/r | |||||||||
| where r is discount rate and n is number of payments | ||||||||||
| Present value | 12000*(1-((1.10^-4)/0.10) | |||||||||
| Present value | 12000*3.169865 | |||||||||
| Present value | $38,038.32 | |||||||||
| Thus, amount used to capitalized lease equipment is $38,038.32 | ||||||||||
| The net annual cash flow is received for next 7 years and amount received each year is equal | ||||||||||
| The discount rate given is 8% | ||||||||||
| Thus, in this case present value of annuity table with interest rate of 8% and number of payments of 7 should be used. | ||||||||||
| Thus, correct answer is PV of annuity table, n=7, i=8% | ||||||||||
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Silverberg Company has just signed a capitalizable lease contract for equipment that requires rental payments of $...
Silverberg Company has just signed a capitalizable lease contract for equipment that requires rental payments of...
Silverberg Company has just signed a capitalizable lease contract for equipment that requires rental payments of $12,000 each, to be paid at the end of each of the next 4 years. The company's discount rate is 10%. What is the amount used to capitalize the leased equipment (i.e. the present value of the lease payments)?
Maxwell Company has just signed a capitalizable lease contract for equipment that requires rental payments of...
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McClintock Company has just signed a capitalizable lease contract for equipment that requires rental payments of $4,000 each, to be paid at the end of each of the next 6 years. The company's discount rate is 10%. What is the amount used to capitalize the leased equipment (i.e. the present value of the lease payments)? $ 24,000.00 $ 104,526.24 A 17,421.04 $ 2,257.88
Silverberg Manufacturing is considering investing $90,000 in a new piece of machinery that will generate net...
Silverberg Manufacturing is considering investing $90,000 in a new piece of machinery that will generate net annual cash flows of $40,000 each year for the next 4 years. The machine has a salvage value of $15.000 at the end of its 4 year useful life. Silverberg's cost of capital and discount rate is 6%. Which of the following tables and criteria should we use to discount the salvage value of the equipment? OPV of annuity table, n=4, i=6% O PV...
Silverberg Manufacturing is considering investing $90,000 in a new piece of machinery that will generate net annual cas...
Silverberg Manufacturing is considering investing $90,000 in a new piece of machinery that will generate net annual cash flows of $40,000 each year for the next 4 years. The machine has a salvage value of $15,000 at the end of its 4 year useful life. Silverberg's cost of capital and discount rate is 6%. Which of the following tables and criteria should we use to discount the net annual cash flow? PV of annuity table, n 1, i-6% PV of...
Blossom, Inc. leased equipment from Tower Company under a 4-year lease requiring equal annual payments of...
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On January 1, 2018, Diana Corporation (a lessor) signed to lease a machinery for eight-year. The lease was noncancellable. The terms of the lease called for Diane to make annual payments of $220,000 starting January 1, 2019 for eight years with the title reverting to the Diana at the end of the lease term. The contract stated that Diane guaranteed the residual value of the machine is $10,000 upon end of lease term. The machinery originally costed Diana $750,000, has...
Johnson Manufacturing is considering investing $80,000 in a new piece of machinery that will generate net annual cash fl...
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Maxwell Machining is considering investing $100,000 in a new piece of machinery that will generate net...
Maxwell Machining is considering investing $100,000 in a new piece of machinery that will generate net annual cash flows of $50,000 each year for the next 5 years. The machine has a salvage value of $20,000 at the end of its 5 year useful life. Maxwell's cost of capital and discount rate is 10%. Which of the following tables and criteria should we use to discount the net annual cash flow? Question 5 options: a PV of annuity table, n=5,...
On January 2, 2018, Sheridan Leasing Company leases equipment to Brick Co. with 5 equal annual...
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McClintock Company has just signed a capitalizable lease contract for equipment that requires rental payments of $4,000 each, to be paid at the end of each of the next 6 years. The company's discount rate is 10%. What is the amount used to capitalize the leased equipment (i.e. the present value of the lease payments)? $ 24,000.00 $ 104,526.24 A 17,421.04 $ 2,257.88
Silverberg Manufacturing is considering investing $90,000 in a new piece of machinery that will generate net annual cash flows of $40,000 each year for the next 4 years. The machine has a salvage value of $15.000 at the end of its 4 year useful life. Silverberg's cost of capital and discount rate is 6%. Which of the following tables and criteria should we use to discount the salvage value of the equipment? OPV of annuity table, n=4, i=6% O PV...
Silverberg Manufacturing is considering investing $90,000 in a new piece of machinery that will generate net annual cash flows of $40,000 each year for the next 4 years. The machine has a salvage value of $15,000 at the end of its 4 year useful life. Silverberg's cost of capital and discount rate is 6%. Which of the following tables and criteria should we use to discount the net annual cash flow? PV of annuity table, n 1, i-6% PV of...
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