For the following lease,determine the minimum lease payments for the lessor. $$\begin{array} { | l | l | }
\hline \text { Annual lease payment at the end of the end } & \$ 22,000 \
\hline \text { Lease term } & 5 \
\hline \text { Incremental rate } & 10 \% \
\hline \text { Implicit rate (unknown to lessee) } & 8 \% \
\hline \text { Executory costs } & 5,000 \
\hline
\end{array}$$
A)67,548
B)71,279
C)86,502
D)91,243

Question

For the following lease,determine the minimum lease payments for the lessor. $$\begin{array} { | l | l | } 
\hline \text { Annual lease payment at the end of the end } & \$ 22,000 \
\hline \text { Lease term } & 5 \
\hline \text { Incremental rate } & 10 \% \
\hline \text { Implicit rate (unknown to lessee) } & 8 \% \
\hline \text { Executory costs } & 5,000 \
\hline
\end{array}$$
A)67,548
B)71,279
C)86,502
D)91,243

Quizplus · Accepted Answer

The minimum lease payments are calculated by taking the annual lease payment minus executory costs, then discounting it using the implicit rate. The calculation is: $(22,000 - 5,000) \times \text{PVIFA}(8\%, 5)$.

For the Following Lease,determine the Minimum Lease Payments for the Lessor