Business, 02.07.2019 02:30 ghlin96

On january 1, 2005, day corp. entered into a 10-year lease agreement with ward, inc. for industrial equipment. annual lease payments of $10,000 are payable at the end of each year. day knows that the lessor expects a 10% return on the lease. day has a 12% incremental borrowing rate. the equipment is expected to have an estimated useful life of 10 years. in addition, a third party has guaranteed to pay ward a residual value of $5,000 at the end of the lease. the present value of an ordinary annuity of $1 at12% for 10 years is 5.6502 10% for 10 years is 6.1446the present value of $1 at12% for 10 years is .3220 10% for 10 years is .3855in day's october 31, 2005 balance sheet, the principal amount of the lease obligation wasa. $63,374.b. $61,446.c. $58,112.d. $56,502.

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On january 1, 2005, day corp. entered into a 10-year lease agreement with ward, inc. for industrial...