On June 30, 2024, Exploration Incorporated signs a lease requiring quarterly payments each year for...
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Accounting
On June 30, 2024, Exploration Incorporated signs a lease requiring quarterly payments each year for the next five years. Each of the 20 quarterly payments is $29,165.05, with the first lease payment beginning September 30. The companys normal borrowing rate is 7%. Use PVA of $1. (Use appropriate factor(s) from the table provided.) Required: 1. Calculate the present value of the lease payments. 2. Record the lease on June 30, 2024.
Table 4 Present Value of an Ordinary Annuity of $1
PVA = 1 1/(1 + i)n/i
n/i
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
5.5%
6.0%
7.0%
8.0%
9.0%
10.0%
11.0%
12.0%
13.0%
1
0.99010
0.98522
0.98039
0.97561
0.97087
0.96618
0.96154
0.95694
0.95238
0.94787
0.94340
0.93458
0.92593
0.91743
0.90909
0.90090
0.89286
0.88496
2
1.97040
1.95588
1.94156
1.92742
1.91347
1.89969
1.88609
1.87267
1.85941
1.84632
1.83339
1.80802
1.78326
1.75911
1.73554
1.71252
1.69005
1.66810
3
2.94099
2.91220
2.88388
2.85602
2.82861
2.80164
2.77509
2.74896
2.72325
2.69793
2.67301
2.62432
2.57710
2.53129
2.48685
2.44371
2.40183
2.36115
4
3.90197
3.85438
3.80773
3.76197
3.71710
3.67308
3.62990
3.58753
3.54595
3.50515
3.46511
3.38721
3.31213
3.23972
3.16987
3.10245
3.03735
2.97447
5
4.85343
4.78264
4.71346
4.64583
4.57971
4.51505
4.45182
4.38998
4.32948
4.27028
4.21236
4.10020
3.99271
3.88965
3.79079
3.69590
3.60478
3.51723
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