Please help me solve this problem correctly Exercise 21A-2 a-c (Part Level Submi

Question

Please help me solve this problem correctly

Exercise 21A-2 a-c (Part Level Submission) On December 31, 2016, Marin Corporation signed a 5-year, non-cancelable lease for a machine. The terms of the lease called for Marin to make annual payments of $8,199 at the beginning of each year, starting December 31, 2016. The machine has an estimated useful life of 6 years and a $5,200 unguaranteed residual value. The machine reverts back to the lessor at the end of the lease term. Marin uses the straight-line method of depreciation for all of its plant assets. Marin's incremental borrowing rate is 11%, and the lessor's implicit rate is unknown ? (a) [y ?Your answer is correct. What type of lease is this? inance This is a/an Jlease. Click if you would like to Show Work for this question: Open Show Work SHOW LIST OF ACCOUNTS SHOW SOLUTION SHOW ANSWER LINK TO TEXT LINK TO TEXT Attempts: 1 of 3 used Compute the present value of the lease payments. (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answer to O decimal places, e.g. 5,275 Present value of the lease payments

Explanation / Answer

Requirement (b) – Present Value of the Lease Payments = $ 33,636

Present Value of the Lease Payments = Annual Lease payments x Present Value annuity due factor

= $8,199 x 4.10245*

= $ 33,636

*Present Value factor of an annuity due of $1 for 5 Years at 11% Incremental Borrowing rate

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