# solution

solution.

A B C D E

1 Schedule of Lease Payments

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2 (Amortization Schedule)

3 Five-Year Lease–Beginning-of-Year Payments

4 Annual Lease Payment \$60,000

5 Bargain Purchase Option Amount or

6 Excess Guaranteed Residual Value \$75,000

7 Interest Rate for the Lease 10%

8 Life of the Lease (# of annual payments) 5

9 Initial Lease Obligation (Payable) \$296,761.03

10 Date Amount Interest Expense Principal Lease Obligation

11 Initial Balance \$296,761.03

12 Beg of Year 1 \$60,000 0 \$60,000 \$236,761.03

13 Beg of Year 2 \$60,000 \$23,676.10 \$36,324 \$200,437.13

14 Beg of Year 3 \$60,000 \$20,043.71 \$39,956 \$160,480.84

15 Beg of Year 4 \$60,000 \$16,048.08 \$43,952 \$116,528.93

16 Beg of Year 5 \$60,000 \$11,652.89 \$48,347 \$68,181.82

17 End of Year 5 \$75,000 \$6,818.18 \$68,182 \$0.00

You are not required to use Excel, but I will give some help assuming that you use Excel. If you use anotherspreadsheet program, you will need to make sure you understand how to accomplish the requirements in thatprogram. The initial lease obligation (cell E11 in the example) should be a present value formula (PV inExcelĂ˘â‚¬â€śmany of you will use the Insert Function command under Formulas) which calculates the present value of theliability based on the numbers in the cells above that (cells E5, E7, E8, and E9 in the example). The arguments ofthe present value formula can/should be cell addresses (except the last Ă˘â‚¬Ĺ“1″ to indicate beginning-of-year payments). Your initial lease obligation may come out negative by using the syntax given, so add a Ă˘â‚¬Ĺ“-Ă˘â‚¬Ĺ“ sign to your formula sothat the lease obligation on your spreadsheet will be a positive number.

You need to submit two pages for your solutionĂ˘â‚¬â€śone page will have the spreadsheet with the numbers showing andthe other will have the spreadsheet with the formulas showing (You may need to adjust the column size of somecolumns to make sure all formulas are printed out completely. Since you are turning in formulas, I will not needyour file for grading). DO NOT submit the Excel file. Instead Ă˘â‚¬Ĺ“printĂ˘â‚¬Âť each page to PDF format and submit thosePDFs. That way I can verify that you followed the instructions below. I will also ask for you to use the followingspecific format when you Ă˘â‚¬Ĺ“printĂ˘â‚¬Âť your results:

1.Each printout should have the row and column headings (A, B, C; 1, 2, 3, etc.)EXCEL:Print Preview/Page Setup/Sheet/Row and Column Headings (check this item)

2.Each printout should have the gridlines printed.EXCEL:Print Preview/Page Setup/Sheet/Gridlines (check this item)

3.Each printout should be formatted to fit on one page.EXCEL:Print Preview/Page Setup/Page/Fit to (check this item and put 1 wide x 1 tall)

4.Each printout should be formatted using either the portrait or landscape format, whichever fits better for thatparticular printout (you may need to change your choice here when you print out your formulas).

5.To print the format with the formulas instead of numbers use the following procedure in Excel (or useCTRL ~ to toggle back and forth from numbers to formulas):EXCEL:Formulas/Formula Auditing/Show Formulas (check this item)