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Novak Company has entered into two lease agreements. In each case the cash equivalent purchase...

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Accounting

Novak Company has entered into two lease agreements. In each case the cash equivalent purchase price of the asset acquired is known and you wish to find the interest rate which applies to the lease payments.
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(a)
Lease A - Lease A covers office equipment that can be purchased for $607,415. Novak Company has, however, chosen to lease the equipment for $114,000 per year, payable at the end of each of the next 9 years.
Calculate the implied interest rate for the lease payments. (Round factor values to 5 decimal places, e.g.1.25124 and final answer to 0 decimal places, e.g.5%.)
Interest rate
%
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