Textbook Notes (280,000)
CA (160,000)
UTSG (10,000)
Chapter

RSM221H1 Chapter Notes -Cash Flow, Financial Statement, Unearned Income


Department
Rotman Commerce
Course Code
RSM221H1
Professor
Scott Douglass

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EXERCISE 20-15 (25-35 minutes)
(a) Part 1. Annuity Due:
Fair market value of leased asset to lessor $415,000.00
Less: Present value of unguaranteed
residual value $25,000 X .68058  
(present value of 1 at 8% for 5 periods)   17,014.50  
Amount to be recovered through lease payments $397,985.50
Five periodic lease payments $397,985.50 ÷ 4.31213* $92,294.41
*Present value of annuity due of 1 for 5 periods at 8%.
Excel formula =PMT(rate,nper,pv,fv,type)
Using a financial calculator:
PV $ (415,000)
I 8%
N 5
PMT $ ? Yields $92,294
FV $ 25,000
Type 1

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EXERCISE 20-15 (Continued)
(a) Part 2. Ordinary Annuity:
Fair market value of leased asset to lessor $415,000.00
Less: Present value of unguaranteed
residual value $25,000 X .68058  
(present value of 1 at 8% for 5 periods)   17,014.50  
Amount to be recovered through lease payments $397,985.50
Five periodic lease payments $397,985.50 ÷ 3.99271* $99,678.04
*Present value of annuity due of 1 for 5 periods at 8%.
Excel formula =PMT(rate,nper,pv,fv,type)
Excel formula =PMT(rate,nper,pv,fv,type)
Using a financial calculator:
PV $ (415,000)
I 8%
N 5
PMT $ ? Yields $99,678
FV $ 25,000
Type 0

Only pages 1-3 are available for preview. Some parts have been intentionally blurred.

EXERCISE 20-15 (Continued)
(b) 1
Vick Leasing Inc., (Lessor)
Lease Amortization Schedule
Date
Annual
Lease
Payment
Plus URV
Interest
(8%) on Net
Investment
Net
Investment
Recovery
Balance
of Net
Investment
Jan. 1, 2011 $415,000.00
Jan. 1, 2011 $92,294.00 $92,294.00 322,706.00
Jan. 1, 2012 92,294.00 $25,816.48 66,477.52 256,228.48
Jan. 1, 2013 92,294.00 20,498.28 71,795.72 184,432.76
Jan. 1, 2014 92,294.00 14,754.62 77,539.38 106,893.38
Jan. 1, 2015 92,294.00 8,551.47 83,742.53 23,150.85
Jan. 1, 2016 25,000.00 1,849.15 23,150.85 0
$486,470.00 $71,470.00 $415,000.00
(b) 2
Vick Leasing Inc., (Lessor)
Lease Amortization Schedule
Date
Annual
Lease
Payment
Plus URV
Interest
(8%) on Net
Investment
Net
Investment
Recovery
Balance
of Net
Investment
Jan. 1, 2011 $415,000.00
Dec. 31, 2011 $99,678.00 $33,200.00 $66,478.00 348,522.00
Dec. 31, 2012 99,678.00 27,881.76 71,796.24 276,725.76
Dec. 31, 2013 99,678.00 22,138.06 77,539.94 199,185.82
Dec. 31, 2014 99,678.00 15,934.87 83,743.13 115,442.69
Dec. 31, 2015 99,678.00 9,235.31 90,442.69 25,000.00
Dec. 31, 2015 25,000.00 - 25,000.00 0.00
$523,390.00 $108,390.00 $415,000.00
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