Question

	Please provide the Lease Oblgation Table for a Finance Lease from the Lessee's point of view which has the following contract terms:
	Refer to the various tables at the end of Chapter 6 of your textbook for all the necessary factors needed to estimate the lease Present Value
	The leasee is renting an unspecified piece of constrution equipment.
	CONTRACT TERMS
	1	Lease term		4 years
	2	Implied Lease Rate		5%
	3	Annual lease payment		20,000
	4	Residual Value		0	Note: The asset's residual value is considered 0 at the end of year 2 for many reasons.

Answer 1

Year	Annual Lease payments	PVF @5%	PV
1	20000	0.952380952 {1/(1.05^1)}	19047.61905
2	20000	0.907029478 {1/(1.05^2)}	18140.58957
3	20000	0.863837599 {1/(1.05^3)}	17276.75197
4	20000	0.822702475 {1/(1.05^4)}	16454.0495
			70919.01008
Year	Opening Balance	Interest @ 5%	Payments	Closing Balance
1	70,919.01	3,545.95	(20,000.00)	54,464.96
2	54,464.96	2,723.25	(20,000.00)	37,188.21
3	37,188.21	1,859.41	(20,000.00)	19,047.62
4	19,047.62	952.38	(20,000.00)	-

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