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Determine the present value of lease payments

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Problem 1: Lessee enters into a five-year lease of office space on January 1, and concludes that the agreement is an operating lease. Lessee pays initial direct costs of $5,000. The agreement provides the following

Lease term                                           Five years, with the first payment due at the end of each year

Annual payments, beginning at the      Year 1 - $25,000

end of the year and annually            Year 2 - $26,000

thereafter                                        Year 3 - $27,000

                                                       Year 4 -- $28,000

                                                    Year 5 -- $29,000

Total                                                  40%

Question 1: Determine the present value of lease payments

 

Reference no: EM132468693

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