Organic Fashion Ltd enters into a 4-year non-cancellable lease agreement starting on 30/6/2017 The f

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Organic Fashion Ltd enters into a 4-year non-cancellable lease agreement starting on 30/6/2017

The following are the provisions of the lease agreement: The fair value of the computerized point of sale system is $179,051 at 30 June 2017 The lease term is for 4 years The annual lease payments are made in advance with $48,000 due immediately and annual

payments of $48,000 on 30 June 2018, 2019, and 2020 The contract specifies that Organic Fashion Ltd specifies a bargain purchase option of

$10,000 at the end of the lease term on 30 June 2021 The interest rate implicit in the lease is 8%

The asset’s residual value at the end of its 4-year effective useful life is nil

1-Prove that the interest rate implicit in the lease is: 8%

Item Discount

factor Workings PV

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