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finance lease: needing clairity and answer

This topic has 4 replies, 4 voices, and was last updated 8 years ago by MikeLittle.

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May 26, 2013 at 11:43 am #127212
kudachikanza
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Lassie acquired an asset under a finance lease arrangement, committing to pay five fixed annual instalments of $20,000 payable in arrears. The cash value of the asset in an outright sale would have amounted to $75,000. What is the lease interest expense to be recognised by Lassie in the third year of the contract?
May 26, 2013 at 3:51 pm #127238
captmario
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What is the rate of interest?
May 27, 2013 at 10:57 am #127312
MikeLittle
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We need to know the answer to CaptMario’s question – what is the rate of interest implicit in the lease
October 23, 2016 at 1:27 pm #345691
sichale
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$5146
October 23, 2016 at 5:11 pm #345716
MikeLittle
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It looks to me, just a guess, that the rate of interest is 11.196412% and, if that estimate is correct, the interest expense in the third year would be $4,973.70
But I could be wrong
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