Answered

At Westonci.ca, we connect you with experts who provide detailed answers to your most pressing questions. Start exploring now! Join our platform to connect with experts ready to provide precise answers to your questions in different areas. Join our platform to connect with experts ready to provide precise answers to your questions in different areas.

Manning Imports is contemplating an agreement to lease equipment to a customer for five years. Manning normally sells the asset for a cash price of $100,000. Assume that 8% is a reasonable rate of interest. What must be the amount of quarterly lease payments (beginning at the inception of the lease) in order for Manning to recover its normal selling price as well as be compensated for financing the asset over the lease term?

Sagot :

anthougo

Answer:

Manning Imports

The amount of the quarterly lease payments (beginning at the inception of the lease) in order for Manning to recover its normal selling price as well as be compensated for financing the asset over the lease term should be:

Payment Every Quarter = $5,266.65

Explanation:

a) Data and Calculations:

Cash price of equipment = $100,000

Reasonable rate of interest = 8%

Lease period = 5 years

Payment period = 20

From an online financial calculator:

Payment Every Quarter   $5,266.65

Total of 20 Payments   $105,332.90

Total Interest   $5,332.90

Lease Amortization Schedule with quarterly payment of $5,266.65:

 Beginning Balance Interest Principal Ending Balance

1 $100,000.00 $500.00 $4,766.65 $95,233.35

2 $95,233.35 $476.17 $4,790.48 $90,442.88

3 $90,442.88 $452.21 $4,814.43 $85,628.45

4 $85,628.45 $428.14 $4,838.50 $80,789.94

Year #1 End

5 $80,789.94 $403.95 $4,862.70 $75,927.25

6 $75,927.25 $379.64 $4,887.01 $71,040.24

7 $71,040.24 $355.20 $4,911.44         $66,128.79

8 $66,128.79 $330.64 $4,936.00 $61,192.79

Year #2 End

9 $61,192.79 $305.96 $4,960.68 $56,232.11

10 $56,232.11 $281.16 $4,985.48 $51,246.63

11 $51,246.63 $256.23 $5,010.41 $46,236.21

12 $46,236.21 $231.18 $5,035.46 $41,200.75

Year #3 End

13 $41,200.75 $206.00 $5,060.64 $36,140.11

14 $36,140.11 $180.70 $5,085.94 $31,054.16

15 $31,054.16 $155.27 $5,111.37         $25,942.79

16 $25,942.79 $129.71 $5,136.93 $20,805.86

Year #4 End

17 $20,805.86 $104.03 $5,162.62 $15,643.24

18 $15,643.24 $78.22 $5,188.43 $10,454.81

19 $10,454.81 $52.27 $5,214.37 $5,240.44

20 $5,240.44 $26.20 $5,240.44 -$0.00

Year #5 End

Thanks for using our platform. We aim to provide accurate and up-to-date answers to all your queries. Come back soon. We appreciate your visit. Our platform is always here to offer accurate and reliable answers. Return anytime. Thank you for visiting Westonci.ca, your go-to source for reliable answers. Come back soon for more expert insights.