On january 1, 2018, savor corporation leased equipment to spree company. the lease term is 9 years. the first payment of $698,000 was made on january 1, 2018. the present value of the lease payments is $4,561,300. the lease is appropriately classified as a sales-type lease. assuming the interest rate for this lease is 9%, how much interest revenue will savor record in 2018 on this lease?

The interest revenue that Savor will record in 2018 on this lease is $347,697

Explanation:

Present value of the lease payment                                      $45,61,300

First payment is made as on January 01 , 2018                      $ 698,000  

the interest on this amount will be not charged            -$6,98,000

Net Value for the interest Charged on lease                    $38,63,300

Interest @ 9% on $ 38,63,300                                               $347,697

Interest revenue on lease for the year 2018                       $347,697

Therefore, The interest revenue that Savor will record in 2018 on this lease is $347,697

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