Kingbird Inc. wishes to lease machinery to Thiensville Company.
Thiensville wants the machinery for 4 years, although it has a
useful life of 10 years. The machinery has a fair value at the
commencement of the lease of $45,000, and Kingbird expects the
machinery to have a residual value at the end of the lease term of
$28,000. However, Thiensville does not guarantee any part of the
residual value. Thiensville does expect that the residual value
will be $43,000 instead of $28,000.
What would be the amount of the annual rental payments Kingbird
demands of Thiensville, assuming each payment will be made at the
end of each year and Kingbird wishes to earn a rate of return on
the lease of 6%? (For calculation purposes, use 5
decimal places as displayed in the factor table provided and round
final answer to 0 decimal places, e.g. 5,275.)
Amount of equal annual lease payments?? $________
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