Problem 2 (30 marks) Here are the terms of a lease agreement: Fair value of...
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Problem 2 (30 marks) Here are the terms of a lease agreement: Fair value of leased asset Lease term Payment frequency Payment timing Guaranteed residual value Interest rate implicit in lease (known to lessee) 14% Lessee's incremental borrowing rate 250,000 4 years Annual End of year 25,000 16% Required: Determine the amount of lease payment that the lessor would require to lease the asset. b. Compute the present value of minimum lease payments for the lessee Compute the present value of minimum lease payments for the lessor a. c. Evaluate whether the lessee should classify the lease as operating or finance d
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