A construction company agreed to lease payments of $427.14 on construction equipment to be made at the end of every month for 8.75 years. Financing is at 9% compounded monthly. (a) What is the value of the original lease contract? (b) If, due to delays, the first 9 payments were deferred, how much money would be needed after 10 payments to bring the lease payments up to date? (c) How much money would be required to pay off the lease after 10 payments? (d) If the lease were paid off after 10 payments, what would the total interest be? (e) How much of the total interest would be due to deferring the first 9 payments? (a) The value of the original lease contract is S. (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.) (b) The company would have to pay S (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.) (c) The company would need S. (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.) (d) The interest would be S (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.) (e) The interest resulting from the deferral is S. (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.)
A construction company agreed to lease payments of $427.14 on construction equipment to be made at the end of every month for 8.75 years. Financing is at 9% compounded monthly. (a) What is the value of the original lease contract? (b) If, due to delays, the first 9 payments were deferred, how much money would be needed after 10 payments to bring the lease payments up to date? (c) How much money would be required to pay off the lease after 10 payments? (d) If the lease were paid off after 10 payments, what would the total interest be? (e) How much of the total interest would be due to deferring the first 9 payments? (a) The value of the original lease contract is S. (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.) (b) The company would have to pay S (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.) (c) The company would need S. (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.) (d) The interest would be S (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.) (e) The interest resulting from the deferral is S. (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:A construction company agreed to lease payments of S427.14 on construction equipment to be made at the end of every month for 8.75 years. Financing is at 9% compounded monthly.
(a) What is the value of the original lease contract?
(b) If, due to delays, the first 9 payments were deferred, how much money would be needed after 10 payments to bring the lease payments up to date?
(c) How much money would be required to pay off the lease after 10 payments?
(d) If the lease were paid off after 10 payments, what would the total interest be?
(e) How much of the total interest would be due to deferring the first 9 payments?
(a) The value of the original lease contract is S
(Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.)
(b) The company would have to pay $
(Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.)
(c) The company would need $.
(Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.)
(d) The interest would be S
(Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.)
(e) The interest resulting from the deferral is S.
(Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.)
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