Shamrock Company leases an automobile with a fair value of $18,013 from John Simon Motors,...
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Shamrock Company leases an automobile with a fair value of $18,013 from John Simon Motors, Inc., on the following terms: 1. 2. 3. Non-cancelable term of 50 months. Rental of $370 per month (at the beginning of each month). (The present value at 0.5% per month is $8,873.) Shamrock guarantees a residual value of $1,600 (the present value at 0.5% per month is $920). Delaney expects the probable residual value to be $1,600 at the end of the lease term. Estimated economic life of the automobile is 60 months Shamrock's incremental borrowing rate is 6% a year (0.5% a month). Simon's Implicit rate is unknown. 4. 5
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