Camia Company is in the business of leasing new sophisticated equipment. As lessor, Camia expects a 12% return on its net investment. All leases are classified as a direct financing lease. At the end of the lease term, the equipment will revert to Camia Company. On January 1, 2010 an equipment is leased to a lessee with the following information. Cost of equipment to Camia-5,500,000 Residual value – unguaranteed-400,000 Annual rental payable in advance-959,500 Useful life and lease term-8 years Implicit interest rate-12% First lease payment-January 1, 2010 What is the total financial income to be recognized over the lease term? a. 2,576,000 b. 2,176,000 c. 1,776,000 d. 1,616,500
Camia Company is in the business of leasing new sophisticated equipment. As lessor, Camia expects a 12% return on its net investment. All leases are classified as a direct financing lease. At the end of the lease term, the equipment will revert to Camia Company. On January 1, 2010 an equipment is leased to a lessee with the following information. Cost of equipment to Camia-5,500,000 Residual value – unguaranteed-400,000 Annual rental payable in advance-959,500 Useful life and lease term-8 years Implicit interest rate-12% First lease payment-January 1, 2010 What is the total financial income to be recognized over the lease term? a. 2,576,000 b. 2,176,000 c. 1,776,000 d. 1,616,500
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Camia Company is in the business of leasing new sophisticated equipment. As lessor, Camia expects a 12% return on its net investment. All leases are classified as a direct financing lease. At the end of the lease term, the equipment will revert to Camia Company. On January 1, 2010 an equipment is leased to a lessee with the following information.
Cost of equipment to Camia-5,500,000
Residual value – unguaranteed-400,000
Annual rental payable in advance-959,500
Useful life and lease term-8 years
Implicit interest rate-12%
First lease payment-January 1, 2010
What is the total financial income to be recognized over the lease term?
Cost of equipment to Camia-5,500,000
Residual value – unguaranteed-400,000
Annual rental payable in advance-959,500
Useful life and lease term-8 years
Implicit interest rate-12%
First lease payment-January 1, 2010
What is the total financial income to be recognized over the lease term?
a. 2,576,000
b. 2,176,000
c. 1,776,000
d. 1,616,500
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