Please me make sure you review the document before accepting this HW

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Please me make sure you review the document before accepting this HW, all answers MUST be correct pleaseHW assignment 6
** Please show calculations for each question to get credit; failure to do so will
result in receiving a grade of 0 for the assignment.
Use the following Annuity Table for questions 1 through 6.
Period
Future Value of Ordinary Annuity of 1
5%
6%
8%
10%
12%
1
2
3
4
5
6
7
8
9
10
Period
1.00000
2.05000
3.15250
4.31013
5.52563
6.80191
8.14201
9.54911
11.02656
12.57789
1.00000
2.06000
3.18360
4.37462
5.63709
6.97532
8.39384
9.89747
11.49132
13.18079
1.00000
2.08000
3.24640
4.50611
5.86660
7.33592
8.92280
10.63663
12.48756
14.48656
Present Value of an Ordinary Annuity of 1
5%
6%
8%
1.00000
2.10000
3.31000
4.64100
6.10510
7.71561
9.48717
11.43589
13.57948
15.93743
1.00000
2.12000
3.37440
4.77933
6.35285
8.11519
10.08901
12.29969
14.77566
17.54874
10%
12%
1
2
3
4
5
6
.95238
1.85941
2.72325
3.54595
4.32948
5.07569
.94340
1.83339
2.67301
3.46511
4.21236
4.91732
.92593
1.78326
2.57710
3.31213
3.99271
4.62288
.90909
1.73554
2.48685
3.16986
3.79079
4.35526
.89286
1.69005
2.40183
3.03735
3.60478
4.11141
7
8
9
10
5.78637
6.46321
7.10782
7.72173
5.58238
6.20979
6.80169
7.36009
5.20637
5.74664
6.24689
6.71008
4.86842
5.33493
5.75902
6.14457
4.56376
4.96764
5.32825
5.65022
Use the following information for questions 1 through 6.
On January 1, 2015, Yancey, Inc. signs a 10-year noncancelable lease agreement to lease a
storage building from Holt Warehouse Company. Collectibility of lease payments is reasonably
predictable and no important uncertainties surround the amount of costs yet to be incurred by
the lessor. The following information pertains to this lease agreement.
(a) The agreement requires equal rental payments at the beginning each year.
(b) The fair value of the building on January 1, 2015 is $3,000,000; the book value to Holt
is also $3,000,000.
(c) The building has an estimated economic life of 10 years, with no residual value. Yancey
depreciates similar buildings on the straight-line method.
(d) At the termination of the lease, the title to the building will be transferred to the lessee.
(e) Yancey’s incremental borrowing rate is 11% per year. Holt Warehouse Co. set the
annual rental to insure a 10% rate of return. The implicit rate of the lessor is known by
Yancey, Inc.
(f) The yearly rental payment includes $8,000 of executory costs related to taxes on the
property.
1.
What is the amount of the minimum annual lease payment?
a. $443,851
b. $451,851
c. $488,236
d. $591,801
2.
What is the amount of the total annual lease payment?
a. $443,851
b. $451,851
c. $488,236
d. $591,801
3.
From the lessee’s viewpoint, what type of lease exists in this case?
a. Sales-type lease
b. Sale-leaseback
c. Capital lease
d. Operating lease
4.
From the lessor’s viewpoint, what type of lease is involved?
a. Sales-type lease
b. Sale-leaseback
c. Direct-financing lease
d. Operating lease
5.
Yancey, Inc. would record depreciation expense on this storage building in 2015
of (Rounded to the nearest dollar.)
a. $0.
b. $300,000.
c. $400,000.
d. $451,851.
6.
If the lease were nonrenewable, there was no purchase option, title to the
building does not pass to the lessee at termination of the lease and the lease were
only for seven years, what type of lease would this be for the lessee?
a. Sales-type lease
b. Direct-financing lease
c. Operating lease
d. Capital lease

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