Flounder Equipment Leasing Company leased equipment to Pharoah Healthcare System on January 1, 2025, for a four- year period. Equal annual payments under the lease are $560000 and are due on January 1 of each year. The first payment was made on January 1, 2025. The implicit rate of interest contemplated by Flounder Equipment Leasing and known to Pharoah Healthcare is 8%. Pharoah's incremental borrowing rate is 11%. The cost of the equipment on Flounder Equipment Leasing accounting records was $680000. Assuming that the lease is appropriately recorded as an operating lease, what is the amount of profit on the sale that Flounder Equipment Leasing would record for the year ended December 31, 2025? 8%, 4 periods 11%, 4 periods $1323176 $509091 O $629091 $0 PV Annuity Due PV Ordinary Annuity PV Single Sum 3.57710 0.73503 3.44371 3.31213 3.10245 0.65873

Flounder Equipment Leasing Company leased equipment to Pharoah Healthcare System on January 1, 2025, for a four- year period. Equal annual payments under the lease are $560000 and are due on January 1 of each year. The first payment was made on January 1, 2025. The implicit rate of interest contemplated by Flounder Equipment Leasing and known to Pharoah Healthcare is 8%. Pharoah's incremental borrowing rate is 11%. The cost of the equipment on Flounder Equipment Leasing accounting records was $680000. Assuming that the lease is appropriately recorded as an operating lease, what is the amount of profit on the sale that Flounder Equipment Leasing would record for the year ended December 31, 2025? 8%, 4 periods 11%, 4 periods $1323176 $509091 O $629091 $0 PV Annuity Due PV Ordinary Annuity PV Single Sum 3.57710 0.73503 3.44371 3.31213 3.10245 0.65873

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 16P

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