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

question 1

Multiple Choice

For the following lease,determine the minimum present value calculation for the lessee.
$$\begin{array} { | l | l | } \hline \text { Annual payment (due at end of year) } & \$ 23,104 \\\hline \text { Lease term } & 5 \\\hline \text { Incremental rate } & 10 \% \\\hline \text { Implicit rate (unknown to lessee) } & 8 \% \\\hline \text { Unguaranteed residual value } & \mathrm { NA } \\\hline \text { Guaranteed residual value } & 20,000 \\\hline\end{array}$$

• A)99,053
• B)100,001
• C)105,859
• D)106,210

---

Definitions:

Risky Investment

An investment with a high potential for loss but also the opportunity for substantial gains.

Organizational Decisions

Choices or judgments made within an organization that determine its actions and strategies.

Quality

The standard of something as measured against other things of a similar kind; the degree of excellence of something.

Responsibility

An obligation to perform or oversee tasks and duties effectively, often with an implication of accountability for the outcomes.