Present value of an ordinary annuity due.
Jill Morris is presently leasing a small business computer from Eller Office Equipment Company. The lease requires 10 annual payments of $5,000 at the end of each year and provides the lessor (Eller) with an 8% return on its investment. You may use the following 8% interest factors:
Instructions
(a) Assuming the computer has a ten-year life and will have no salvage value at the expiration of the lease, what was the original cost of the computer to Eller?
(b) What amount would each payment be if the ten annual payments are to be made at the beginning of each period?

Question

Present value of an ordinary annuity due.
Jill Morris is presently leasing a small business computer from Eller Office Equipment Company. The lease requires 10 annual payments of $5,000 at the end of each year and provides the lessor (Eller) with an 8% return on its investment. You may use the following 8% interest factors:  
Instructions
(a) Assuming the computer has a ten-year life and will have no salvage value at the expiration of the lease, what was the original cost of the computer to Eller?
(b) What amount would each payment be if the ten annual payments are to be made at the beginning of each period?

Quizplus · Accepted Answer

The Answer of Present value of an ordinary annuity due.
Jill Morris is presently leasing a small business computer from Eller Office Equipment Company. The lease requires 10 annual payments of $5,000 at the end of each year and provides the lessor (Eller) with an 8% return on its investment. You may use the following 8% interest factors:  
Instructions
(a) Assuming the computer has a ten-year life and will have no salvage value at the expiration of the lease, what was the original cost of the computer to Eller?
(b) What amount would each payment be if the ten annual payments are to be made at the beginning of each period?

Present Value of an Ordinary Annuity Due