How much is the manufacturer profit by the lessor

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Question - On January 1, 2018, Navotas leased telecommunications equipment from Ragatak Voice, Inc. Ragatak Voice's cash cost of manufacturing the equipment is P435,526. The lease agreement specifies six annual payments of P100,000 beginning December 31, 2018 and at each December 31 thereafter through 2023. The six-year lease is equal to the estimated useful life of the equipment. The contract specifies that lease payments for each year will increase by the higher of (a) the increase in the Consumer Price Index for the preceding year and (b) 3 percent. The CPI at the beginning of the lease is 120. Ragatak Voice routinely leases equipment to other firms. The interest rate in these lease arrangements is 10%. Round your answers to the nearest whole peso amounts. How much is the manufacturer's profit by the lessor?

Reference no: EM132835702

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