Use the Present Value and Future Value Tables Included in Appendix

question 63

Multiple Choice

Use the present value and future value tables included in Appendix 8 and on the textbook companion website.
-On January 1, Cromwell Corp. leased a mainframe computer from Fairview Company for $42,000 per year (payable on each December 31) for 10 years. The lease is a capital lease, and the current market rate of interest is 12 percent. The market value of the computer is $237,300, which is equal to its discounted present value at 12 percent. Given this data, the amount of the lease obligation at the end of the first year is

• A) $237,300
• B) $420,000
• C) $208,824
• D) $223,776

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