Q3. IEdeas signed a contract to lease a building at P60,000 a year with an annual increase of P1,000 a year for 5 years. Payments are to be made at the end of each year, starting one year from now. If money is worth 8%, what lump sum paid today is equivalent to the 5-year lease-payment plan?
Q3. IEdeas signed a contract to lease a building at P60,000 a year with an annual increase of P1,000 a year for 5 years. Payments are to be made at the end of each year, starting one year from now. If money is worth 8%, what lump sum paid today is equivalent to the 5-year lease-payment plan?
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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This is how you answer the problem
(a) Identify the Given and the Unknown or what is being asked in the problem
(b)Provide the formula to be used
(c)Plug in the given in the formula if there is a derivation of the formula please show it
(d)Box the final answer. however, the final answer is already included in the problem, what you need to do is to match your answer and the answer in the book. Because in the book they only provide the answer but not the solution.
Ps:Do not give me an answer which is made in ms excel.I need the manual solution, I am not an accountant to understand ms excel solutions.Pls rely as well on the given answers.
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Transcribed Image Text:Q3. IEdeas signed a contract to lease a building at P60,000 a year with an annual increase of P1,000 a
year for 5 years. Payments are to be made at the end of each year, starting one year from now. If money
is worth 8%, what lump sum paid today is equivalent to the 5-year lease-payment plan?
Answer: P=246,935.03
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