Compute the amount of financial revenue

Assignment Help Accounting Basics

Reference no: EM13149769

Aquarius Incorporated (AI) uses leases as a method of selling its products. In early 2011, AI completed construction of a passenger ferry for use between Manhattan and Staten Island. On April 1, 2011, the ferry was leased to the Manhattan Ferry Line on a contract specifying that ownership of the ferry will transfer to the lessee at the end of the lease period. Annual lease payments do not include executory costs. Other terms of the agreement are as follows:

Original Cost of the ferry $1,500,000
Fair Value of ferry at the lease date $2,107,102
Lease Payments (paid in advance) $225,000
Estimated residual value (unguaranteed) $78,000
Incremental borrowing rate - lessee $10%
Date of first lease payment April 1, 2011
Lease period 20 years

Required:

(a) Compute the amount of financial revenue that will be earned over the lease term and the manufacturer's profit that will be earned immediately by Aquarius

Reference no: EM13149769

Questions Cloud

Recognized gain-basis in the stock : Shull Company assumes the $45,000 mortgage on the land as part of the transfer. What is Dave's recognized gain? What is his basis in the stock?

What is the capitalized cost of bridge at an interest rate : The annual maintenance cost is estimated to be $100K. A major renovation at a cost of $50M is required every 100 years. What is the capitalized cost of the bridge at an interest rate of 5%?

High blood levels of triglycerides are thought to partially : High blood levels of triglycerides are thought to be partially responsible for clogging of arteries, heart attacks, and strokes. A female had a blood test that gave a high triglyceride level

How much will annual percentage decline : If the mortgage interest rate is 7 percent, approximately how much are home owners paying in annual mortgage interest? b. If the interest rate drops to 6 percent, by how much will annual percentage decline?

Compute the amount of financial revenue : Compute the amount of financial revenue that will be earned over the lease term and the manufacturer's profit that will be earned immediately by Aquarius

What impact would it have on the real price of resources : What impact would (a) and (b) have on the real price of resources, profit margins, output, and employment.

Write the structural formulas for the two chloro-isomers : write the structural formulas for the two 2 chloro-isomers that can be formed from 2-methylpropane(isobutane)

Explain how the adverse inflation shock affects the as curve : Explain how the adverse inflation shock affects the AS curve. (ii) Discuss, using AD-AS diagram, what choices the Fed now must make regarding monetary policy.

What is your certainty equivalent for these two projects : If you were the angel investor, what is your certainty equivalent for these two projects? Are you risk-averse, risk-neutral, or risk-lover?

User Account

All Pages