Kaye Corporation agreed to lease a computer, at cost, to Lumbar Company for $36,000 payable each year-end for seven years without a bargain purchase option, or, as an equivalent alternative, for $33,000 per year with a bargain purchase option, after the seventh rental. If the lease is a direct financing lease, and Kaye expects to earn a 1 . percent return, the amount of cash Lumbar Company would
need to pay for the bargain purchase option is
a. $30,266.
b. $26,340.
c. $21,000.
d. $9,948.
A
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