2. * (Inspired by CT1 exam April '09) A company has agreed to rent a warehouse for 30 years. The rent will be paid quarterly in advance and will increase every three years at the rate of 3% per annum compound. The initial rent is set at £1,200,000 p.a. with the first payment duo immodiatoly Calculate the NRW of th fintoroct of 5% na
2. * (Inspired by CT1 exam April '09) A company has agreed to rent a warehouse for 30 years. The rent will be paid quarterly in advance and will increase every three years at the rate of 3% per annum compound. The initial rent is set at £1,200,000 p.a. with the first payment duo immodiatoly Calculate the NRW of th fintoroct of 5% na
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![*
2. (Inspired by CT1 exam April '09) A company has agreed to rent a warehouse for 30 years.
The rent will be paid quarterly in advance and will increase every three years at the rate of
3% per annum compound. The initial rent is set at £1,200,000 p.a. with the first payment
due immediately. Calculate the NPV of the contract at a rate of interest of 5% p.a.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F69cce4ac-4bf6-4e6b-8636-bf160e045b58%2Ff6852bd3-c8dd-4f5b-bd6f-2824ada0bfd1%2Flsbmqg_processed.jpeg&w=3840&q=75)
Transcribed Image Text:*
2. (Inspired by CT1 exam April '09) A company has agreed to rent a warehouse for 30 years.
The rent will be paid quarterly in advance and will increase every three years at the rate of
3% per annum compound. The initial rent is set at £1,200,000 p.a. with the first payment
due immediately. Calculate the NPV of the contract at a rate of interest of 5% p.a.
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why do we use the same value in step three for the remaining 15 years , instead of finding the new value with 3% increase after that
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