(SO1PI2) At an interest rate of 10% per year, the present worth in year 0 of lease that requires a payment of $11,000 now and amounts increasing by 10% per year through year 8 is closest to Select one: O a. $80,000 O b. $81,818 c. $99,000 O d. $90,000

(SO1PI2) At an interest rate of 10% per year, the present worth in year 0 of lease that requires a payment of $11,000 now and amounts increasing by 10% per year through year 8 is closest to Select one: O a. $80,000 O b. $81,818 c. $99,000 O d. $90,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Leasing

Leasing is a contractual arrangement in which someone (a lessee) pays the owner (or lessor) of a building, land, vehicle, or other asset for the use of that asset. The lease is the agreement between lessee and lessor.

Question

(SO1PI2) At an interest rate of 10%
per year, the present worth in year 0
of lease that requires a payment of
$11,000 now and amounts increasing
by 10% per year through year 8 is
closest to
Select one:
O a. $80,000
O b. $81,818
O c. $99,000
O d. $90,000

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Follow-up Question

What is the cash value of a three-year lease that require payments of $2097.64 payable at the beginning of each month for five years if interest is 10% compounded semi-annually?

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