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Homework answers / question archive / ABC Leasing Company purchased specialized equipment from Hernandez Company on March 1, 2020 for $1,200,000

ABC Leasing Company purchased specialized equipment from Hernandez Company on March 1, 2020 for $1,200,000

Accounting

ABC Leasing Company purchased specialized equipment from Hernandez Company on March 1, 2020 for $1,200,000. On the same date, it leased this equipment to Nguyen Company for 5 years, the useful life of the equipment. The lease payments begin March 1, 2020 and are made every 6 months until September 1, 2024. ABC Leasing wants to earn 10% annually on its investment.

Calculate the amount of each lease payment.

Hint: Given Nguyen is going to use the equipment for its entire useful life, what should the present value of lease payments be equal to?

Option 1

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2.89 USD

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Option 2

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