9-14. Assume: 8 % interest straight line depreciation (amortization) no residual

Question

9-14. Assume: 8 % interest straight line depreciation (amortization) no residual (salvage) value capitalize operating lease Required footnote disclosure: Fiscal year Capital Lease $410 $415 Operating Lease $500 $500 $500 $300 $300 2005 2006 2007 2008 2009 thereafter $600 In class and in our text we discussed and studied an approach to capitalize operating leases. Using method please answer the following questions: 9. What is the estimated number of remaining years left on the lease? 10. Using the above information to capitalize operating leases, what is the estimated

Explanation / Answer

The thereafter cash flow for operating lease is $600

The 2009 level of cash flow is $300

So estimated number of years left on lease = $600/$300 = 2

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