How much is the annual rental

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Reference no: EM132772032

Problem 1: Alcatel Company leased an asset to another company. The cost of the asset was P7,994,000. Terms of the lease specify 4 year life for the lease, an annual interest rate of 15%, and 4-year-end rental payments. The lease qualified as a direct financing lease. The lease provided for a transfer of title to the lessee at the end of the lease term. After the 4th year, the residual value was estimated at P1,000,000. The PV of 1 at 15% for 4 periods is 0.572, and the PV of an ordinary annuity of 1 at 15% for 4 periods is 2.855. How much is the annual rental?

Reference no: EM132772032

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