Pisa inc leased equipment from tower company under a

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Reference no: EM13599141

Pisa, Inc. leased equipment from Tower Company under a four-year lease requiring equal annual payments of $86,038, with the first payment due at lease inception. The lease does not transfer ownership, nor is there a bargain purchase option. The equipment has a 4-year useful life and no salvage value. Pisa, Inc.'s incremental borrowing rate is 10% and the rate implicit in the lease (which is known by Pisa, Inc.) is 8%. Assuming that this recorded by Pisa, Inc. in the first year of the asset's life?

PV Annuity Due PV Ordinary Annuity

8% 4 periods 3.57710 3.31213
10% 4 periods 3.48685 3.16986

Reference no: EM13599141

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