For the Following Lease,determine the Minimum Present Value Calculation for the Lessee

question 5

Multiple Choice

For the following lease,determine the minimum present value calculation for the lessee.
$$\begin{array} { | l | l | } \hline \text { Annual payment (due at end of year) } & \$ 22,000 \\\hline \text { Lease term } & 5 \\\hline \text { Incremental rate } & 10 \% \\\hline \text { Implicit rate (unknown to lessee) } & 8 \% \\\hline \text { Unguaranteed residual value } & 15,000 \\\hline \text { Bargain purchase option } & 5,000 \\\hline\end{array}$$

• A)86,502
• B)91,243
• C)95,816
• D)101,451

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Definitions:

Open Lands

Areas of natural, undeveloped land, often preserved for recreational, ecological, or agricultural purposes.

Foreclosed

A legal process where a borrower's right to a property is terminated, usually due to failure to meet the repayment terms of a loan secured by that property.