Frieda is considering the purchase of a lease that will allow her to operate a restaurant at the local airport for a period of five years. The lease will cost $37,908. Frieda anticipates annual profits of $10,000. At what discount rate will Frieda be indifferent between purchasing and not purchasing the lease; that is, what is the implied annual rate of return on the cost of the lease?

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The Answer of Frieda is considering the purchase of a lease that will allow her to operate a restaurant at the local airport for a period of five years. The lease will cost $37,908. Frieda anticipates annual profits of $10,000. At what discount rate will Frieda be indifferent between purchasing and not purchasing the lease; that is, what is the implied annual rate of return on the cost of the lease?

Frieda Is Considering the Purchase of a Lease That Will