On January NRC Credit Corporation leased equipment to Brand Services under a financesalestype lease designed to earn NRC a rate of return for providing longterm financing. The lease agreement specified the following:
Ten annual payments of $ beginning January the beginning of the lease and each December thereafter through
The estimated useful life of the leased equipment is years with no residual value. Its cost to NRC was $
The lease qualifies as a finance leasesalestype lease.
A year service agreement with Quality Maintenance Company was negotiated to provide maintenance of the equipment as required. Payments of $ per year are specified, beginning January NRC was to pay this cost as incurred, but lease payments reflect this expenditure.
A partial amortization schedule, appropriate for both the lessee and lessor, follows:
Note: Use tables, Excel, or a financial calculator. FV of $ PV of $ FVA of $PVA of $ FVAD of $ and PVAD of $
tablePayments,tableEffective Interest
