Hite Company has a machine with a cost of $400,000 which also is its fair market value on the date the machine is leased to Rich Company. The lease is for 6 years and the machine is estimated to have an unguaranteed residual value of $40,000. If the lessor's interest rate implicit in the lease is 12%, the six beginning-of-the-year lease payments would be
A) $92,361.
B) $82,465.
C) $78,180.
D) $66,667.

Question

Quizplus · Accepted Answer

[$400,000 - ($40,000 × .50663)] ÷ 4.60478 = $82,465.

Hite Company Has a Machine with a Cost of $400,000