A Company is planning on leasing construction equipment from C Company starting on January 2,...
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A Company is planning on leasing construction equipment from C Company starting on January 2, 20X8. The terms of the lease require annual payments of $43,000 for seven years. The implicit interest rate is 11%. The first payment is due on the first day of the lease and subsequent payments are due on December 31 of each year beginning in 20X8. The equipment has a useful life of nine years, there is no bargain purchase option included in the contract, and the title will not transfer from C Company to A Company at the end of the lease term. The fair value of the equipment at the time of the lease signing is $275,000.
How to calculate the present value of the minimum lease payments?
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