The Following Information Relates to a Lease Contract: Inception: 1/1/x1

The following information relates to a lease contract: Inception: 1/1/x1 Annual lease payments of $3,000 due each 12/31 beginning 12/31/x1
End of lease term: 1/1/x5
There are 4 lease payments in all Useful life of asset at inception: 10 yrs
Expected residual value at 1/1/x5: $6,000
Lessee is given option to purchase asset at 1/1/x5 for $1,000
Using an interest rate of 10%, what is the present value of minimum lease payments for t lessee at inception?

A) $13,608
B) $13,000
C) $9,510
D) $10,419
E) $10,193

Correct Answer:

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