Hi,
I am stuck on a question and cannot get around it;
The question is;
CR enters into a lease on 1 Jan X1 for a machine with a fair value of £235,000.
CR will make annual payments in arrears of £70,000 over the 4 year lease term.
The rate implicit is 9%.
The answer:
£70,000 x 3.240 = £226,800
(subsequent treatment - add finance cost less rental repayments)
X1 £226,800 £20,412 (9%) (£70,000) £177,212
X2 £177,212 £15,949 (9%) (£70,000) £123,161
I understand the last part.
I don't see where the 3.240 comes from...
I also not sure why the subsequent treatment was mentioned there either
Thank you, I have been on this for hours :(
CIMA Forums
Rate Implicit - Leases
worked it out
6y ago#2Glad you've worked it out. I believe that it is the annuity factor for the four payments at 9%.
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