User Account

All Pages

What is the interest rate implicit in the finance lease

Assignment Help Accounting Basics
Reference no: EM132638064

Question - Finozest Solutions Limited (Finozest) is involved in transporting commodities from Lilongwe to Lusaka. The company is required to replace its trucks regularly owing to the importance of providing a reliable service to customers. The company is considering investing in a new truck at a cost of K1.2 million. Finozest's bank has indicated that it can offer the company a finance lease with payments of K292,510.00, payable annually in arrears for five years. There is no residual payment or value. Kindly ignore taxation.

Required -

1. What is the interest rate implicit in the finance lease?

2. Assume that the bank wishes to keep the lease payment at K292,510.00 but requires that the annual payments are payable in advance. How does this change the interest rate implicit in the lease?

3. Assume that the truck has an expected residual value of K450,000 at the end of five years and the bank takes this residual value into account in setting the lease payments, which are payable annually in advance. How would this change your lease payment?

Reference no: EM132638064

Questions Cloud

Impact on the yield of a new bond issue : What are some of the features that could be included with a bond prospectus that may have an impact on the yield of a new bond issue?
Calculate the current assets total : Land held for future business site 18,000. In Red Velvet's December 31, 20x1 balance sheet, calculate the current assets total
What is the ear and ytm for vanguard treasury : What is the EAR and YTM for Vanguard Treasury Money Market Fund which has a 5 year security term, current yield=0.45%, interest/coupon payment
Risk management and vulnerability assessment : What is a Vulnerability assessment? What is the relationship between risk management and vulnerability assessment?
What is the interest rate implicit in the finance lease : Finozest Solutions Limited (Finozest) is involved in transporting commodities from Lilongwe to Lusaka. What is the interest rate implicit in the finance lease
What is the ear-ytm-vanguard : Vanguard federal Money market fund has a 5 year security term with the current yield at 0.44%, coupon/interest payment=5.62%, future return of 0.94%
Cyber criminals steal millions of dollars with near impunity : Internet-related crime occurs every minute. Cyber criminals steal millions of dollars with near impunity.
What was Merit Watch book value per share on December : The company did not sell any common shares during the year. What was Merit Watch's book value per share on December 31, 2001
What types of elder abuse did you notice in the scenario : Mr. CO is a 75, year old male. He was admitted to your unit with Pulmonary Fibrosis. As you are walking towards his room to administer medications you hear his.

Reviews

Write a Review

Accounting Basics Questions & Answers

  Prepare journal entries needed on books of martinez company

Prepare the journal entries needed on the books of Martinez Company to record the following.(Round intermediate calculations to 6 decimal places, e.g. 1.251247)

  The plating department then adds an anodized finish

Classic Accessories manufactures auto roof racks in a two-stage process that includes shaping and plating. Steel allow is the best raw material of the shaping process. The steel is molded according to the design specifications of automobile manufactu..

  Compute the current ratio as of the beginning of the month

Robin Incorporated has the potential transactions involving current assets and current liabilities. Compute the current ratio as of the beginning of the month.

  Renfro manufacturing identified following data in its two

renfro manufacturing identified the following data in its two production departments.1. what is the companys single

  Spring waters inc produces bottled drinks the new york

spring waters inc. produces bottled drinks. the new york division acquires the water adds carbonation and sells it in

  Hancock purchased a machine on july 1 2011 at a cost of

hancock corporation is in the process of preparing its financial statements for 2013. assume no entries for

  What are the total expenses

What are the total expenses that P may deduct for 2014

  Calculate the latest finish for task b if its predecessor

Calculate the latest finish for Task B if its predecessor, Task A, finishes on day 3, its succeeding activity, Task E, has a latest start of day 7

  What will be the payback period

If company can establish a steady customer base before production starts and the cash inflows will be $14,530 per year for years 1 - 15, what the payback period

  Determine basic earrings per share of common stock

A) calucate the basic earrings per share of common stock for the year ended Jan 31,2011

  Company adopted a healthcare plan for its retired employees.

On January 1, 2010, Flash and Dash Company adopted a healthcare plan for its retired employees. To determine eligibility for benefits, the company retroactively gives credit to the date of hire for each employee. The following information is availabl..

  Calculate the costs charged as of months end

Calculate the costs charged as of month's end and the equivalent units of production for Job

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd