Question

On January 1, James Industries leased equipment to a customer for a four-year period, at which time possession of the leased asset will revert back to James. The equipment cost James $700,000 and has an expected useful life of six years. Its normal sales price is $700,000. The residual value after four years is $100,000. 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 5%. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)Guaranteed Residual ValueTable or calculator function: n=?, i=?Amount ot be recovered (fair value) $?Guaranteed residual value $?

Answer 1

The calculation are listed in the image attached in the answer.

Step-by-step explanation:

For the James Industries exercise, the last two calculations are explained what means the divisor on the very first calculations. There are some other ratios necessary to be recalculated for the exercise porpuse.