On its 2017 balance sheet, Petaluma Manufacturers Inc. reports minimum capital lease payments of $510,000 to be paid as follows:
The company also discloses a net present value of these payments of $432,000.
a. How is Petaluma Manufacturers' balance sheet affected by these capital leases?
b. What is the interest rate implicit in this net present value?

Question

On its 2017 balance sheet, Petaluma Manufacturers Inc. reports minimum capital lease payments of $510,000 to be paid as follows: 
  The company also discloses a net present value of these payments of $432,000. 
a. How is Petaluma Manufacturers' balance sheet affected by these capital leases?
b. What is the interest rate implicit in this net present value?

Quizplus · Accepted Answer

The Answer of On its 2017 balance sheet, Petaluma Manufacturers Inc. reports minimum capital lease payments of $510,000 to be paid as follows: 
  The company also discloses a net present value of these payments of $432,000. 
a. How is Petaluma Manufacturers' balance sheet affected by these capital leases?
b. What is the interest rate implicit in this net present value?

On Its 2017 Balance Sheet, Petaluma Manufacturers Inc