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What is the amount of the annual lease payments

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Problem - On January 1, James Industries leased equipment to a customer for a five-year period, at which time possession of the leased asset will revert back to James. The equipment cost James $790,000 and has an expected useful life of seven years. Its normal sales price is $790,000. The residual value after five years is $200,000. Lease payments are due on December 31 of each year, beginning with the first payment at the end of the first year. The interest rate is 7%. What is the amount of the annual lease payments?

Reference no: EM132853681

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