The lessor Sorelia enters into a finance lease of an agricultural tractor. The lessee pays 5 annual payments of 50,000, in arrears. At the end of the lease, the tractor returns to Sorelia, which expects an unguaranteed residual value of 10,000. The interest rate implicit in the lease is 7 %. Compute the net investment in the lease at the commencement date, rounded to the nearest euro.
- Annual payment in arrears
- 50,000
- Number of annual payments
- 5
- Unguaranteed residual value
- 10,000
- Interest rate implicit in the lease
- 7 %