All Four Company leases equipment for 6 years with an annual

All Four Company leases equipment for 6 years with an annual rental of $3,500 per year or $21,000 in total. Pro Leasing (the lessor) agrees to provide All Four with $750 for the first two years of the lease to defray needed repairs to the equipment. Determine the lease payments that All Four will pay for the first three years of the lease agreement.

Solution

the lease payments for the first three years will be calculated as follows

as it is given that the annual lease payment is $ 3,500 for 3 years the total will be = 3500 x 3 = 10,500

The lessor agrees to provide $ 750 for thefirst two years for repairs needed

So the net payment to the lessor by the all four company for the first 3 years = 10,500 - 750 = 9,750