Lane Co. has a machine that cost €600,000. It is to be leased for 20 years with rent received at the beginning of each year. Lane wants a return of 10%. Calculate the amount of the annual rent.

Question

Quizplus · Accepted Answer

The correct answer is A.The annual rent can be calculated using the formula:Rent = (Cost of machine * Interest rate) / (1 - (1 + Interest rate)^-Number of years)Substituting the given values, we get:Rent = (600,000 * 0.1) / (1 - (1 + 0.1)^-20)= 60,000 / (1 - 0.3855)= 60,000 / 0.6145= €64,068

Lane Co Has a Machine That Cost €600,000