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What minimum lease payments should larkspur charge

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Reference no: EM132580003

Larkspur Corporation entered into an agreement to lease out a piece of equipment to a customer. The details of the lease are as follows:

  • Equipment cost of $125,000
  • Lease term of 8 years
  • Guaranteed residual value of $10,800
  • Annual payments on the lease would be due at the beginning of each year.

Question 1: In order to earn a 4% return, what minimum lease payments should Larkspur charge its customer for this equipment lease? Assume Larkspur follow ASPE. (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 5,275.)

Reference no: EM132580003

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