Present and future value tables of $1 at 3% are presented below:

-A firm leases equipment under a long-term lease (analogous to an installment purchase) that calls for 12 semiannual payments of $39,014.40. The first payment is due at the inception of the lease. The annual rate on the lease is 6%. What is the value of the leased asset at inception of the lease?
A) $388,349.
B) $400,000.
C) $454,128.
D) $440,082.

Question

Present and future value tables of $1 at 3% are presented below:

-A firm leases equipment under a long-term lease (analogous to an installment purchase) that calls for 12 semiannual payments of $39,014.40. The first payment is due at the inception of the lease. The annual rate on the lease is 6%. What is the value of the leased asset at inception of the lease?
A) $388,349. 
B) $400,000. 
C) $454,128. 
D) $440,082.

Quizplus · Accepted Answer

PVAD = $39,014.40 × 10.25262 * = $400,000
*PVAD of $1: n = 12; i = 3%

Present and Future Value Tables of $1 at 3% Are