Elephant Services leased an asset to Northridge Corporation on January 1, 2015. The cost of the asset to Elephant was $25,000.
Terms of the lease are specified below:
· Lease term is six years
· The annual discount rate is 20%
· The payments are due on December 31 of each year
· The lease is a capital lease and a direct-financing lease
· Elephant Services will receive the asset at the end of the lease term
· The estimated residual value at the time the lease reverts to Elephant Services totals $5,000
Compute the annual rental lease payments.
Round all calculations to the nearest dollar. You are also required to utilize the time value tables from the textbook. Do not compute the answers with a financial calculator as if your computations are not within +/- $2 of my solution then you will not receive any credit.