Pepe has been signed a contract to lease a machine at P150,000 per year with an annual increase of P10,500 for 10 years. Payments are to be made at the end of each year, starting one year from now. The prevailing interest rate is 2.5%. What lump sum paid today would be equivalent to the 10-year lease-payment plan?
Mortgages
A mortgage is a formal agreement in which a bank or other financial institution lends cash at interest in return for assuming the title to the debtor's property, on the condition that the obligation is paid in full.
Mortgage
The term "mortgage" is a type of loan that a borrower takes to maintain his house or any form of assets and he agrees to return the amount in a particular period of time to the lender usually in a series of regular equally monthly, quarterly, or half-yearly payments.
Pepe has been signed a contract to lease a machine at P150,000 per year with an annual increase of P10,500 for 10 years. Payments are to be made at the end of each year, starting one year from now. The prevailing interest rate is 2.5%. What lump sum paid today would be equivalent to the 10-year lease-payment plan?
Step by step
Solved in 3 steps
