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What is the present value of the minimum lease payments

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Reference no: EM132472233

Problem - Nash Company leases an automobile with a fair value of $9,505 from John Simon Motors, Inc., on the following terms:

1. Noncancelable term of 50 months.

2. Rental of $210 per month (at end of each month). (The present value at 1% per month is $8,232.)

3. Estimated residual value after 50 months is $1,000. (The present value at 1% per month is $608.) Nash Company guarantees the residual value of $1,000.

4. Estimated economic life of the automobile is 60 months.

5. Nash Company's incremental borrowing rate is 12% a year (1% a month). Simon's implicit rate is unknown.

Required - What is the present value of the minimum lease payments?

Reference no: EM132472233

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