Compute the increase in the lessor pretax net income

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Reference no: EM131286918

Two parties sign a lease with the following characteristics on 1/1/x1: ____ Interest rate, 10% ____ Lease term, 5 years ____ Useful life of leased asset at inception, 5 years _____ Lease payments are due each Dec. 31 ____ At inception, the leased asset’s cost is $500,000; its fair value is $600,000. Compute the increase in the lessor's pretax net income for 20x1 due to this lease.

a. 100,000

b. 50,000

c. 160,000

d. 60,000

e. 150,000

Reference no: EM131286918

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