https://newc education.com/flow/connect.html oter 15 Manning Imports is contempl

Question

https://newc education.com/flow/connect.html oter 15 Manning Imports is contemplating an agreement to lease equipment to a customer for two years. Manning normally sells the asset for a cash price of $110,000. Assuming that 10% is a reasonable rate of interest. (FVorsi, PVorsi PVAD of $) (Use appropriate factorts) from the tables provided.) A of $1, PVA of $1, FVAD of $1 and What must be the amount of quarterly lease payments (beginning at the beginning of the lease) in order for Manning to recover its normal selling price as well as be compensated for financing the asset over the lease term? (Round your answers to nearest whole number and round percentage answer to 1 decimal place.) on PV of Lease Next

Explanation / Answer

Given,

Cash Price of Assets (Fair Value) = $110,000

Number Of Years = 2years

Quarters = 2 x 4 = 8 Quarters

Rate Of Interest per quarter (i / r) = 10% / 4 = 2.5%

Now,

Quarterly Lease Payment,

PV of Annuity Factor = 7.34939 (According to table of PV $1)

OR

PV of Annuity Factor = PVAD / Fair Value

PVAD = P + P [ 1 - (1 + r) -(n - 1) / r ] = $808,433

PV of Annuity Factor = $808,433 / $110,000 = 7.34939 (According to formula)

Quarterly Lease Payments = $110,000 / 7.34939

= $14,967

Hence

Quarterly Lease Payments = $14,967

PV Factos Based On Table or Calculator Function : PVAD of $1 PV of Lease $110,000 n = 8 i = 2.5% Lease Payment $14,967

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