[Anonymous]

Ok , I am stuck with this problem. I just can’t move forward. It is a Wiley test bank lease simulation question

As per simulation Present value is given = $366,976 but I still want to calculate it to build my confidence.

Here are the detail:

SP: $400,000

Annual 10 lease payments: $ 50,000, first payment due on Dec31,00

Bargain option = $10,000

Borrowing rate = 8%

PV of ordinary annuilty @ 8% 9 year = 6.24689

PV of ordinary annuity @8% 10 years = 6.71

PV for $1 @8% 10 years = 0.46319

The way I solved is :

50,000*6.71*6.71 + 10,000*0.46319 = $= $340,131 .. am I missing anything???? Or may be I am misreading the question ????????? HELP!!!

[LSNYC]

I think it works like this

50,000*6.24689 + 10,000*.46319 +50,000 = 366,976.40

The first payment is due now so you only use the present value of 9 and add the full 50,000 paid at dec 31 to get total present value

I hope this looks right I'm on my phone at work :/

A - 61, 91!!
B - 78!
F - 76!!!
R - 71, 73, 74, 69, 77!!!!

Finally done!

This is my 2nd attempt at the exam, I had two parts passed (failed many) and I stupidly quit, big mistake. Now I'm back and with a vengeance!

[Anonymous]

Thanks so mucccccccccccccchhh LSNYC- you are the best — xxxxxxxxxxx

[Author]

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