Common use of E and F enter into Clause in Contracts

E and F enter into. a long- term agreement for a 6-year lease of personal property beginning on January 1, 2000, and ending on December 31, 2005. The rental agreement provides that the rent allocated to the calendar years in the lease term and paid at successive six-month intervals (on June 30 and December 31) during the lease term is the sum of the interest on the les- sor’s indebtedness, in the amount of $4,637,577, and an amount determined in ac- cordance with the following schedule: Year Amount 2000 ............................................................... $539,574 2001 ............................................................... 583,603 2002 ............................................................... 631,225 2003 ............................................................... 886,733 2004 ............................................................... 959,090 2005 ............................................................... 1,037,352 (ii) Assume further that the lessor’s in- debtedness bears interest at the rate of 2 per- cent in excess of the 6-month London Inter- bank Offered Rate (LIBOR) in effect on the first day of the 6-month period for each rent- al period and that, on the agreement date, the interest rate under this formula would be 8 percent. If the interest rate remained fixed during the entire lease term, the formula for determining the rent payable by the lessee would result in payments of rent in the amount of $450,000 for each six-month period in 2000, 2001, and 2002, and $550,000 for each six-month period in 2003, 2004, and 2005.