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June 2012 past paper

This topic has 1 reply, 2 voices, and was last updated 12 years ago by MikeLittle.

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April 9, 2013 at 3:49 pm #122010
chiaramunton
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Lease payment question 2. The lease payments are $441,000 at 7%. Over 20 years I got discount rate (1/1.07)20= 0.258. I
I don’t understand how the answer gives Dr Interest 350 & creditor 91 (Cr cash 441) ?
Advise please, thanks
April 9, 2013 at 8:28 pm #122035
MikeLittle
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Why are you taking the 20 year discount factor? Surely it should be just for the next year?
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