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Compute the present value of the lease payments

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Question - On December 31, 2019, Teal Mountain Corporation signed a 5-year, non-cancelable lease for a machine. The terms of the lease called for Teal Mountain to make annual payments of $8,634 at the beginning of each year of the lease, starting December 31, 2019. The machine has an estimated useful life of years and a $4,900 unguaranteed residual value. The machine reverts back to the lessor at the end of the lease term. Teal Mountain uses the straight-line method of depreciation for all of its plant assets. Teal Mountain's incremental borrowing rate is 12%, and the lessor's implicit rate is unknown. Compute the present value of the lease payments.

Reference no: EM133182573

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