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. Given the structure of the lease, the payments, and the residual value information, what is General's net investment in the lease during 2015? (Round the answer to the nearest dollar.)

A) $248,475
B) $158,475
C) $186,492
D) $264,137

Correct Answer:

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