The Tramontane group leases a fleet of refrigerated trucks for 3 years, for 80,000 per year paid at the end of each year. The lessor has provided all the lease data: the interest rate implicit in the lease, which can be readily determined, is 5 %. Tramontane's incremental borrowing rate is 7 %. Compute the lease liability at the commencement date, rounded to the nearest euro.
- Annual lease payment paid at the end of the year
- 80,000
- Lease term
- 3
- Interest rate implicit in the lease
- 5 %
- Lessee's incremental borrowing rate
- 7 %