The Following Are Some of the Characteristics of an Asset

question 95

Essay

The following are some of the characteristics of an asset available for lease:
$$\begin{array} { | l | l | } \hline \text { Fair value of leased asset } & 150,000 \\\hline \text { Lease term } & 8 \text { years } \\\hline \text { Payment frequency } & \text { Annual } \\\hline \text { Payment timing } & \text { Beginning of year } \\\hline \text { Guaranteed residual value } & 25,000 \\\hline \text { Interest rate implicit in lease (not known to lessee) } & 11 \% \\\hline \text { Lessee's incremental borrowing rate } & 9 \% \\\hline\end{array}$$ Requirements:
a.Determine the amount of lease payment that the lessor would require to lease the asset.
b.Compute the present value of minimum lease payments for the lessee.

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Definitions:

Dark Adaptation

The process by which the eyes become more sensitive to low levels of light after exposure to darkness.

Monocular Cue

A visual perception mechanism that allows depth and distance to be discerned with just one eye.

Accommodation Cue

A visual information cue that helps perceive depth by changing the focus of the lens of the eye to see objects at different distances clearly.

Binocular Cue

Visual information taken in by both eyes that enables depth perception, distance estimation, and a three-dimensional view of the world.