Bravo Manufacturing Company is negotiating with a customer for the lease of a large machine manufactured by Bravo. The machine has a cash price of $840,000. Bravo wants to be reimbursed for financing the machine at a 7% annual interest rate. Required: 1. Determine the required lease payment if the lease agreement calls for 15 equal annual payments beginning immediately. 2. Determine the required lease payment if the first of 15 annual payments will be made one year from the date of the agreement. 3. Determine the required lease payment if the first of 15 annual payments will be made immediately and Bravo will be able to sell the machine to another customer for $54,000 at the end of the 15-year lease.

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
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Bravo Manufacturing Company is negotiating with a customer for the lease of a large machine manufactured by Bravo. The machine
has a cash price of $840,000. Bravo wants to be reimbursed for financing the machine at a 7% annual interest rate.
Required:
1. Determine the required lease payment if the lease agreement calls for 15 equal annual payments beginning immediately.
2. Determine the required lease payment if the first of 15 annual payments will be made one year from the date of the agreement.
3. Determine the required lease payment if the first of 15 annual payments will be made immediately and Bravo will be able to sell
the machine to another customer for $54,000 at the end of the 15-year lease.
Note: For all requirements, Use tables, Excel, or a financial calculator. (FV of $1. PV of $1. EVA of $1. PVA of $1. EVAD of $1 and PVAD
of $1)
Complete this question by entering your answers in the tabs below.
Required I Required 2
Required 3
Determine the required lease payment if the first of 15 annual payments will be made immediately and Bravo will be able to
sell the machine to another customer for $54,000 at the end of the 15-year lease.
Note: Do not round intermediate calculations. Round your final answer to nearest whole dollar amount.
Transcribed Image Text:ok nces Bravo Manufacturing Company is negotiating with a customer for the lease of a large machine manufactured by Bravo. The machine has a cash price of $840,000. Bravo wants to be reimbursed for financing the machine at a 7% annual interest rate. Required: 1. Determine the required lease payment if the lease agreement calls for 15 equal annual payments beginning immediately. 2. Determine the required lease payment if the first of 15 annual payments will be made one year from the date of the agreement. 3. Determine the required lease payment if the first of 15 annual payments will be made immediately and Bravo will be able to sell the machine to another customer for $54,000 at the end of the 15-year lease. Note: For all requirements, Use tables, Excel, or a financial calculator. (FV of $1. PV of $1. EVA of $1. PVA of $1. EVAD of $1 and PVAD of $1) Complete this question by entering your answers in the tabs below. Required I Required 2 Required 3 Determine the required lease payment if the first of 15 annual payments will be made immediately and Bravo will be able to sell the machine to another customer for $54,000 at the end of the 15-year lease. Note: Do not round intermediate calculations. Round your final answer to nearest whole dollar amount.
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