Captive Leasing Company
Captive Leasing Company recently leased machinery to VonBurn Building Associates. The 5-year lease contract requires rental payments of $10,000 at the beginning of each year. The lease meets at least one of the Group I criteria. The 9% implicit rate on the lease is known at VonBurn. There is a $4,000 guaranteed residual value by the lessee, which is equal to the expected residual value at the end of the lease term. Therefore, there is no unguaranteed residual asset.
-Based on the above information, calculate the present value of the guaranteed residual value on the lease commencement date.

Question

Quizplus · Accepted Answer

The Answer of Captive Leasing Company
Captive Leasing Company recently leased machinery to VonBurn Building Associates. The 5-year lease contract requires rental payments of $10,000 at the beginning of each year. The lease meets at least one of the Group I criteria. The 9% implicit rate on the lease is known at VonBurn. There is a $4,000 guaranteed residual value by the lessee, which is equal to the expected residual value at the end of the lease term. Therefore, there is no unguaranteed residual asset.
-Based on the above information, calculate the present value of the guaranteed residual value on the lease commencement date.

Captive Leasing Company Captive Leasing Company Recently Leased Machinery to VonBurn Building Associates