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Calculate annual lease payment j corporation should charge

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Reference no: EM132964197

J Corporation, a private company using ASPE, wants to lease a $ 500,000 piece of machinery with an estimated economic life of eight years, to S Inc. J wants to earn a 9% return on its lease. The machinery will be leased for 7 years, and the annual rental payment will be due at the signing of the lease and on the following six anniversaries of the lease thereafter. The lease does not include a bargain purchase option or residual value at the end of the lease.

Problem a) How would you classify the above-mentioned lease?

Problem b) Rounding off all figures to the nearest dollar, calculate the annual lease payment J Corporation should charge to S Corporation.

Reference no: EM132964197

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