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. Lease payments is?

Solution

Calculation of lease payments for the first three years

the annual rent is $ 3,500 per year so for 3 years it will be = 3500 x 3 = 10,500

the lessor agreed to provide $ 750 for the first two years for repairs

therefore the net payment to be made for 3 years lease rent will be = 10,500 - 750 = 9,750