For the following lease,determine the minimum lease payments for the lessor. $$\begin{array} { | l | l | }
\hline \text { Annual lease payment at the end of the end } & \$ 22,000 \
\hline \text { Lease term } & 5 \
\hline \text { Incremental rate } & 10 \% \
\hline \text { Implicit rate (unknown to lessee) } & 8 \% \
\hline \text { Unguaranteed residual value } & 15,000 \
\hline
\end{array}$$
A)83,400
B)92,711
C)98,048
D)102,304

Question

For the following lease,determine the minimum lease payments for the lessor. $$\begin{array} { | l | l | } 
\hline \text { Annual lease payment at the end of the end } & \$ 22,000 \
\hline \text { Lease term } & 5 \
\hline \text { Incremental rate } & 10 \% \
\hline \text { Implicit rate (unknown to lessee) } & 8 \% \
\hline \text { Unguaranteed residual value } & 15,000 \
\hline
\end{array}$$
A)83,400
B)92,711
C)98,048
D)102,304

Quizplus · Accepted Answer

The minimum lease payments for the lessor include the present value of the lease payments and the present value of the unguaranteed residual value, both discounted at the implicit rate of 8%. The calculation is: $PV = 22,000 \times \text{PVIFA}(8\%, 5) + 15,000 \times \text{PVIF}(8\%, 5)$. This results in approximately 98,048.

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