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What the pv of the lease payment by company mel

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Reference no: EM132842224

On 1 July 2019, Mel Company leased a vehicle from Ben Company. The vehicle cost Ben $47,095.20 considered to be its fair value on that same day. The finance lease agreement contained the following provisions:

The lease term is 4 years, starting on 1 July 2019.
Annual lease Payment, payable on 30 June each year is $12,000
Estimated useful life the Vehicle is 5 years.
Estimated Residual Value of the vehicle at the end of the lease is $10,000.
Residual Value Guaranteed by Company Mel is 5,000.
Interest rate implicit in the lease is 8%.
Present value of an annuity: PVIFA (T3, 8%, 4 Year) = 3.3121
Present value of $1: PVIF (T1, 8%, 4 Year) = 0.7350

Required

Problem 1: the PV of the lease payment by company Mel (lessee) at 1 July 2019?

Select one:

a. $33,589.70

b. $47,095.20

c. $43,420.20

d. $41,000

Reference no: EM132842224

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