tsmith86
Mar 18, 2007, 05:48 PM
Can someone please help me with the following problem. I am really confused and not really sure where to start.
On December 1, 2007, Bugs Motors leased a car, which cost it $25,000, to R.J. Hunter for 24 months, the initial payment being made at the time the lease was signed. R.J. could have purchased the car for $30,000. Bugs Motors requires a 12 percent annual return ( 1 percent a month) and expects to be able to resell the car for $18,000 when it is returned, but it did not require R.J. to guarantee that value.
Required:
1. Determine the amount of the payments.
2. What type of lease is this for Bugs Motors?
On December 1, 2007, Bugs Motors leased a car, which cost it $25,000, to R.J. Hunter for 24 months, the initial payment being made at the time the lease was signed. R.J. could have purchased the car for $30,000. Bugs Motors requires a 12 percent annual return ( 1 percent a month) and expects to be able to resell the car for $18,000 when it is returned, but it did not require R.J. to guarantee that value.
Required:
1. Determine the amount of the payments.
2. What type of lease is this for Bugs Motors?