Two years ago the rental for the use of equipment and facilities as paid 5 years in advance, with option to renew the rent for another years by payment of P150,000.00 annually at the start of each year for the renewal period. Now, the lessor asks the lessee if it could be possible to prepay the rental that will be paid annually in the renewed 5 years period. If the lessee will consider the request, what would the fair prepayment to be made to lessor if interest is now figured at 8%?
Two years ago the rental for the use of equipment and facilities as paid 5 years in advance, with option to renew the rent for another years by payment of P150,000.00 annually at the start of each year for the renewal period. Now, the lessor asks the lessee if it could be possible to prepay the rental that will be paid annually in the renewed 5 years period. If the lessee will consider the request, what would the fair prepayment to be made to lessor if interest is now figured at 8%?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Two years ago the rental for the use of equipment and facilities as paid 5 years in advance, with option to renew the rent for another years by payment of P150,000.00 annually at the start of each year for the renewal period. Now, the lessor asks the lessee if it could be possible to prepay the rental that will be paid annually in the renewed 5 years period. If the lessee will consider the request, what would the fair prepayment to be made to lessor if interest is now figured at 8%?
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