Exhibit 20-4 on January 1, 2014, Average Leasing Company Entered

Exhibit 20-4 On January 1, 2014, Average Leasing Company entered into a direct financing lease with a lessee, Lenny Company. The lease agreement calls for five equal annual payments of $75,000 at the beginning of each year with the first payment due on January 1, 2014. The leased property has an estimated residual value of $10,000, which Lenny does not guarantee. The property remains the property of Average at the end of the lease term. Average desires a 12% rate of return. Present value factors for a 12% interest rate are as follows:
-Refer to Exhibit 20-4. The cost of the leased property to Average is (round the answer to the nearest dollar)

A) $308,475
B) $302,801
C) $276,032
D) $270,358

Correct Answer:

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