For the following lease,determine the minimum lease payments for the lessee. $$\begin{array} { | l | l | }
\hline \text { Annual lease payment at the end of the end } & \$ 22,000 \
\hline \text { Lease term } & 5 \
\hline \text { Incremental rate } & 10 \% \
\hline \text { Implicit rate (unknown to lessee) } & 8 \% \
\hline \text { Executory costs } & 5,000 \
\hline
\end{array}$$
A)64,443
B)67,876
C)83,397
D)87,840

Question

For the following lease,determine the minimum lease payments for the lessee. $$\begin{array} { | l | l | } 
\hline \text { Annual lease payment at the end of the end } & \$ 22,000 \
\hline \text { Lease term } & 5 \
\hline \text { Incremental rate } & 10 \% \
\hline \text { Implicit rate (unknown to lessee) } & 8 \% \
\hline \text { Executory costs } & 5,000 \
\hline
\end{array}$$
A)64,443
B)67,876
C)83,397
D)87,840

Quizplus · Accepted Answer

The minimum lease payments for the lessee are $64,443. This is calculated as follows:Annual lease payment at the end of the end = $22,000Lease term = 5Incremental rate = 10%Implicit rate (unknown to lessee) = 8%Executory costs = 5,000Present value of minimum lease payments = $64,443

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