For the following lease,determine the minimum lease payments for the lessee. $$\begin{array} { | l | l | }
\hline \text { Annual lease payment at the end of the end } & \$ 23,000 \
\hline \text { Lease term } & 5 \
\hline \text { Incremental rate } & 10 \% \
\hline \text { Implicit rate (knownto lessee) } & 8\% \
\hline \text { Unguaranteed residual value } & 5,000 \
\hline \text { Guaranteed residual value } & 20,000 \
\hline
\end{array}$$
A)91,832
B)102,711
C)105,444
D)108,847

Question

For the following lease,determine the minimum lease payments for the lessee. $$\begin{array} { | l | l | } 
\hline \text { Annual lease payment at the end of the end } & \$ 23,000 \
\hline \text { Lease term } & 5 \
\hline \text { Incremental rate } & 10 \% \
\hline \text { Implicit rate (knownto lessee) } & 8\% \
\hline \text { Unguaranteed residual value } & 5,000 \
\hline \text { Guaranteed residual value } & 20,000 \
\hline
\end{array}$$
A)91,832
B)102,711
C)105,444
D)108,847

Quizplus · Accepted Answer

To find the minimum lease payments, we need to calculate the present value of the lease payments using the lessee's incremental borrowing rate. Using a financial calculator or spreadsheet, we get a present value of $105,444 for the lease payments. Therefore, the minimum lease payments for the lessee is $105,444.

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