Calculation of Lease Amounts for Lessor for Manufacturer/Dealer Leases with Guaranteed

question 51

Essay

Calculation of lease amounts for lessor for Manufacturer/Dealer leases with guaranteed residual amount.
Cow Co. is a farming equipment dealer who reports using IFRS. It plans to lease a piece of farming equipment to Horse Inc. and wants to earn a profit on the equipment as well as earn interest. The details of the lease are as follows:
-It will be a 5 year lease and will have annual rental payments due at the beginning of the year.
-The rate of return Cow Co. wants to earn on the equipment is 7%.
-The estimated residual value (guaranteed) is $ 10,000 (the present value of which is $ 7,130).
-The annual lease payments are $ 55,359 (the present value of which is $ 242,870); and
-The leased equipment has an $ 200,000 cost to the dealer, Cow Co.
Instructions
Calculate the gross investment, unearned interest income, sales revenue, cost of goods sold and gross profit for Cow Co.

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Definitions:

Male Privilege

The set of societal privileges that benefit men by virtue of their gender, often at the expense of women and other genders.

Respectability Politics

The attempt by marginalized groups to police their own members and show their social values as being continuous and compatible with mainstream values.

Transphobia

The fear, hatred, disbelief, or mistrust of people who are transgender, leading to discrimination and exclusion.

Assimilationist Politics

Policies or practices that encourage individuals or groups to conform to the cultural norms of a dominant or majority group, often at the expense of their own cultural identity.