Compute the present value of the minimum lease payments

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Question - On January 1, 2017, Marigold Corporation signed a 5-year noncancelable lease for a machine. The terms of the lease called for Marigold to make annual payments of $8,215 at the beginning of each year, starting January 1, 2017. The machine has an estimated useful life of 6 years and a $5,200 unguaranteed residual value. The machine reverts back to the lessor at the end of the lease term. Marigold uses the straight-line method of depreciation for all of its plant assets. Marigold's incremental borrowing rate is 10%, and the lessor's implicit rate is unknown.

Compute the present value of the minimum lease payments.

Reference no: EM132448268

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