Your client, Albert Lee Leasing Company, is preparing a contract to lease a machine to Souvenirs Corporation for a period of 25 years. Lee has an investment cost of $429,000 in the machine, which has a useful life of 25 years and no salvage value at the end of that time. Your client is interested in earning an 12% return on its investment and has agreed to accept 25 equal rental payments at the end of each of the next 25 years. Click here to view factor tables. You are requested to provide Lee with the amount of each of the 25 rental payments that will yield an 12% return on investment. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to O decimal places, e.g. 458,581.) Amount of each rental payments $

Your client, Albert Lee Leasing Company, is preparing a contract to lease a machine to Souvenirs Corporation for a period of 25 years. Lee has an investment cost of $429,000 in the machine, which has a useful life of 25 years and no salvage value at the end of that time. Your client is interested in earning an 12% return on its investment and has agreed to accept 25 equal rental payments at the end of each of the next 25 years. Click here to view factor tables. You are requested to provide Lee with the amount of each of the 25 rental payments that will yield an 12% return on investment. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to O decimal places, e.g. 458,581.) Amount of each rental payments $

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 9P

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Your client, Albert Jackson Leasing Company, is preparing a contract to lease a machine to Souvenirs Corporation for a period of 25 years. Jackson has an investment cost of $427,700 in the machine, which has a useful life of 25 years and no salvage value at the end of that time. Your client is interested in earning an 10% return on its investment and has agreed to accept 25 equal rental payments at the end of each of the next 25 years. Click here to view factor tables. You are requested to provide Jackson with the amount of each of the 25 rental payments that will yield an 10% return on investment. (Round factor values to 5 decimal places, eg. 1.25124 and final answer to 0 decimal places, e.g. 458,581) Amount of each rental payments
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Suppose that you purchased industrial equipment that requires special software to run the machine. The licensing agreement calls for a $20,000 payment immediately and $10,000 every other year to renew and get any update on the software. If the machine is to be kept for 48 years, determine the total equivalent cost in present worth at an interest rate of 10%.
Kent Duncan is exploring the possibility of opening a self-service car wash and operating it for the next five years until he retires. He has gathered the following information: A building in which a car wash could be installed is available under a five-year lease at a cost of $3,400 per month. Purchase and installation costs of equipment would total $315,000. In five years the equipment could be sold for about 10% of its original cost. An investment of an additional $2,000 would be required to cover working capital needs for cleaning supplies, change funds, and so forth. After five years, this working capital would be released for investment elsewhere. Both a wash and a vacuum service would be offered. Each customer would pay $1.54 for a wash and $.85 for access to a vacuum cleaner. The only variable costs associated with the operation would be 7.5 cents per wash for water and 10 cents per use of the vacuum for electricity. In addition to rent, monthly costs of operation…