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Determine the present value of minimum lease rental payment

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Reference no: EM133107253

Question - MAP Ltd acquired an item of equipment and entered into a non-cancellable lease agreement with ELM Equipment Ltd on 1 January 2019. The lease consists of the following:

Date of inception: 1/1/19

Duration of lease: 5 years

Life of leased asset: 6 years

Lease payments (annual): $250,000 (annual) which includes $30,000 for Maintenance and insurance costs per annum.

Guaranteed residual value (Added to final payment): $70,000

Interest rate: 6%

Required - Determine the present value of minimum lease rental payment.

Reference no: EM133107253

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