The terms of the lease agreement are as follows 1 the

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Unformatted text preview: n 1 July 2001. The terms of the lease agreement are as follows: 1. The lease is for 4 years with no renewal option and is cancellable only with the permission of the lessor. 2. Lease payments of Malaysian Ringgit (MR) 60,000 per year are due on 1 July every year with the first payment made on the signing the lease contract. 3. The fair value of the equipment on 1 July, 2001 is MR400,000 and has an economic life of 7 years with no salvage value. 4. Integrity depreciates similar machinery it owns on a straight-line basis. 5. Promet uses a rate of 10% p.a. in computing the lease payments and it depreciates the equipment on a straight-line basis. 6. Integrity net profit before tax for the year ended 2000 was $150,000 and the net book value of its fixed assets was $800,000 at 31 December 2000. 7. The exchange rates of S$ to MR are as follows: Spot 1 July 2001 31 December 2001 MR1.00 = S$0.46 MR1.00 = S$0.47 TABLE: Present Value of $1 After n Periods n\i 1 2 3 4 10.0% 0.90909 0.82645 0.75131 0.683...
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