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General Accounting Discussions: Calculating lessee PV of Min. lease payments

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    • CommentAuthorcajay
    • CommentTimeApr 7th 2007
     
    Why is the non-guaranteed residual value deducted from the lessee's payments?
    Ex. Annual payments due at beginning of year. Non-guaranteed residual value at end of term = 10,000

    This is the solution on a financial calculator:
    PV=(150,000)
    I=11%
    N=6
    PMT=?
    FV= 10,000


    PMT=30,804
    Why is the FV of 10,000 included in the calculation?
    • CommentAuthorAbusamak
    • CommentTimeApr 10th 2007
     
    the future value not included in the calculation
    PMT= PV / PVIFA
    good luck,

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