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Compute the amount of the lease receivable

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Swifty Company, a machinery dealer, leased a machine to Dexter Corporation on January 1, 2017. The lease is for an 8-year period and requires equal annual payments of $39,542 at the beginning of each year. The first payment is received on January 1, 2017. Swifty had purchased the machine during 2016 for $181,000. Collectibility of lease payments is reasonably predictable, and no important uncertainties surround the amount of costs yet to be incurred by Swifty. Swifty set the annual rental to ensure an 12% rate of return. The machine has an economic life of 10 years with no residual value and reverts to Swifty at the termination of the lease.

problem (a) Compute the amount of the lease receivable. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,971.)

Reference no: EM132785665

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