The lessor Tervane leases a hydraulic press whose fair value at the inception date is 420,000. The lessee pays 5 annual payments of 100,000, in arrears; no residual value is guaranteed. For the classification analysis, Tervane discounts the lease payments at 8 % (case datum). Compute the present value of the lease payments at the inception date, rounded to the nearest euro.
- Annual payment in arrears
- 100,000
- Number of annual payments
- 5
- Discount rate used for the analysis
- 8 %
- Fair value of the press at the inception date
- 420,000