Wallace Corporation entered into a direct financing lease (interest rate 12 percent) to lease Grommit an asset that cost Wallace $90,000. The lease specified annual year-end payments for seven years. The lease also specified that, along with the last payment, Grommit could purchase the asset for $8,000 cash. Under this lease agreement, Grommit will be required to pay annual payments of
A) $11,714.
B) $12,858.
C) $17,966.
D) $18,928.

Question

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The Answer of Wallace Corporation entered into a direct financing lease (interest rate 12 percent) to lease Grommit an asset that cost Wallace $90,000. The lease specified annual year-end payments for seven years. The lease also specified that, along with the last payment, Grommit could purchase the asset for $8,000 cash. Under this lease agreement, Grommit will be required to pay annual payments of
A) $11,714.
B) $12,858.
C) $17,966.
D) $18,928.

Wallace Corporation Entered into a Direct Financing Lease (Interest Rate