Finding Assets Under Capital Lease-HELP

J

jb207

New member
Joined
Jun 18, 2026
Messages
0
Reaction score
0
Could someone please help...

Equip. is leased for 5,000 per year for 3 years, with the first pmt due at the end of the first year. The interest rate implicit in the lease is 10% and the lessee's incremental borrowing rate is 11%. The lease terms include a guaranteed residual value pmt of 3,000 at end of lease expiration.

Assets Under Capital Lease = 14,688 as well as Capital lease obligation.

I have an HP12C...I know this is an ordinary annuity due, but can't come up with the answer!!!

It should be PV of 5,000/year annuity for 3 yrs + PV of 3,000 in 3 years @ 10%

Does anyone know the keystrokes for finding this?????
 
jb207, I use the TI calculator, but your problem may stem from confusing the difference between an "annuity" and an "annuity due." Specifically, annuity payments are made at the end of a period, while annuity-due payments are made at the beginning of a period.

Based on your description of the problem, this should be an annuity, not an annuity due. Someone else will have to chime in w/ specific key-stroke instructions...
 
You could just do it straight without relying on fancy calculator functions, i.e., 5000/1.1 + 5000/1.21 + 8000/1.331. I would hit '5', '0','0','0','/','1','.','1','=', '+', .....

or in my head I would say that 5/11 is 0.4545 so this is 4554 + 4/5(5000) + 3/4(8000) = 4554 + 4000 + 6000 = 14554 give or take $10.
 
Does anyone have keystrokes for the HP12C for this problem? JoeyDVivre, what is 5/11 and 4/5, 3/4....could you explain in a little more detail on how you came up with the answer?
 
http://www.jbf.aim.edu.ph/cfa/Schweser%20HP12C%20User%20Guide.pdf

perhaps this should help you.

5/11 , 4/5 , 3/4 are examples of short cut methods of number crunching -recommended only if manipulating numbers comes intuitively to you.



Edited 1 time(s). Last edit at Saturday, July 21, 2007 at 01:16AM by Dsylexic.
 
You must log in or register to reply here.
Back
Top