I will rate asap...Thank you in advance The Deluxe Corporation has just signed a
ID: 2653691 • Letter: I
Question
I will rate asap...Thank you in advance
The Deluxe Corporation has just signed a 132-month lease on an asset with a 16-year life. The minimum lease payments are $3,200 per month ($38,400 per year) and are to be discounted back to the present at a 10 percent annual discount rate. The estimated fair value of the property is $260,000. Use Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. Assume the lease is set up as an annual lease.
Calculate the lease period as a percentage to the estimated life of the leased property. (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)
Calculate the present value of lease payments as a percentage to the fair value of the property. (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)
I will rate asap...Thank you in advance
The Deluxe Corporation has just signed a 132-month lease on an asset with a 16-year life. The minimum lease payments are $3,200 per month ($38,400 per year) and are to be discounted back to the present at a 10 percent annual discount rate. The estimated fair value of the property is $260,000. Use Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. Assume the lease is set up as an annual lease.
Explanation / Answer
Question a. Lease Period 132 month Life of the assets 16 years Lease period percent = 132/(16 x12) 68.75% Question b. PV Factor Present Month Installments at 10% Value 1 3200 0.991736 3173.55 2 3200 0.983539 3147.33 3 3200 0.975411 3121.32 4 3200 0.96735 3095.52 5 3200 0.959355 3069.94 6 3200 0.951427 3044.56 7 3200 0.943563 3019.40 8 3200 0.935765 2994.45 9 3200 0.928032 2969.70 10 3200 0.920362 2945.16 11 3200 0.912756 2920.82 12 3200 0.905212 2896.68 13 3200 0.897731 2872.74 14 3200 0.890312 2849.00 15 3200 0.882954 2825.45 16 3200 0.875657 2802.10 17 3200 0.86842 2778.94 18 3200 0.861243 2755.98 19 3200 0.854125 2733.20 20 3200 0.847067 2710.61 21 3200 0.840066 2688.21 22 3200 0.833123 2665.99 23 3200 0.826238 2643.96 24 3200 0.81941 2622.11 25 3200 0.812638 2600.44 26 3200 0.805922 2578.95 27 3200 0.799261 2557.64 28 3200 0.792656 2536.50 29 3200 0.786105 2515.54 30 3200 0.779608 2494.75 31 3200 0.773165 2474.13 32 3200 0.766775 2453.68 33 3200 0.760438 2433.40 34 3200 0.754154 2413.29 35 3200 0.747921 2393.35 36 3200 0.74174 2373.57 37 3200 0.73561 2353.95 38 3200 0.72953 2334.50 39 3200 0.723501 2315.20 40 3200 0.717522 2296.07 41 3200 0.711592 2277.09 42 3200 0.705711 2258.27 43 3200 0.699879 2239.61 44 3200 0.694094 2221.10 45 3200 0.688358 2202.75 46 3200 0.682669 2184.54 47 3200 0.677027 2166.49 48 3200 0.671432 2148.58 49 3200 0.665883 2130.83 50 3200 0.66038 2113.22 51 3200 0.654922 2095.75 52 3200 0.64951 2078.43 53 3200 0.644142 2061.25 54 3200 0.638818 2044.22 55 3200 0.633539 2027.32 56 3200 0.628303 2010.57 57 3200 0.62311 1993.95 58 3200 0.617961 1977.47 59 3200 0.612853 1961.13 60 3200 0.607789 1944.92 61 3200 0.602766 1928.85 62 3200 0.597784 1912.91 63 3200 0.592844 1897.10 64 3200 0.587944 1881.42 65 3200 0.583085 1865.87 66 3200 0.578266 1850.45 67 3200 0.573487 1835.16 68 3200 0.568748 1819.99 69 3200 0.564047 1804.95 70 3200 0.559386 1790.03 71 3200 0.554763 1775.24 72 3200 0.550178 1760.57 73 3200 0.545631 1746.02 74 3200 0.541122 1731.59 75 3200 0.536649 1717.28 76 3200 0.532214 1703.09 77 3200 0.527816 1689.01 78 3200 0.523454 1675.05 79 3200 0.519128 1661.21 80 3200 0.514837 1647.48 81 3200 0.510583 1633.86 82 3200 0.506363 1620.36 83 3200 0.502178 1606.97 84 3200 0.498028 1593.69 85 3200 0.493912 1580.52 86 3200 0.48983 1567.46 87 3200 0.485782 1554.50 88 3200 0.481767 1541.65 89 3200 0.477785 1528.91 90 3200 0.473837 1516.28 91 3200 0.469921 1503.75 92 3200 0.466037 1491.32 93 3200 0.462186 1478.99 94 3200 0.458366 1466.77 95 3200 0.454578 1454.65 96 3200 0.450821 1442.63 97 3200 0.447095 1430.70 98 3200 0.4434 1418.88 99 3200 0.439736 1407.15 100 3200 0.436101 1395.52 101 3200 0.432497 1383.99 102 3200 0.428923 1372.55 103 3200 0.425378 1361.21 104 3200 0.421863 1349.96 105 3200 0.418376 1338.80 106 3200 0.414919 1327.74 107 3200 0.411489 1316.77 108 3200 0.408089 1305.88 109 3200 0.404716 1295.09 110 3200 0.401371 1284.39 111 3200 0.398054 1273.77 112 3200 0.394764 1263.25 113 3200 0.391502 1252.81 114 3200 0.388266 1242.45 115 3200 0.385058 1232.18 116 3200 0.381875 1222.00 117 3200 0.378719 1211.90 118 3200 0.375589 1201.89 119 3200 0.372485 1191.95 120 3200 0.369407 1182.10 121 3200 0.366354 1172.33 122 3200 0.363326 1162.64 123 3200 0.360324 1153.04 124 3200 0.357346 1143.51 125 3200 0.354392 1134.06 126 3200 0.351464 1124.68 127 3200 0.348559 1115.39 128 3200 0.345678 1106.17 129 3200 0.342821 1097.03 130 3200 0.339988 1087.96 131 3200 0.337178 1078.97 132 3200 0.334392 1070.05 Total 255593.56 Answer: Percentage of PV to Asset Value 98.31% Question c. Answer: Capital Lease Reason is Present value 98.31% of Assets Market Price.