Advantage Leasing Ltd. is in the business of purchasing equipment, which it then leases to other companies. Advantage calculates the payments on its five-year leases so that it recovers the original cost of the equipment plus a return on investment of 15% compounded quarterly over the term of the lease. What will be the required lease payments on a machine that cost $25,000 if the lease payments will be received:
a) At the beginning of every month?
b) At the beginning of each six month period?

Question

Quizplus · Accepted Answer

The Answer of Advantage Leasing Ltd. is in the business of purchasing equipment, which it then leases to other companies. Advantage calculates the payments on its five-year leases so that it recovers the original cost of the equipment plus a return on investment of 15% compounded quarterly over the term of the lease. What will be the required lease payments on a machine that cost $25,000 if the lease payments will be received:
a) At the beginning of every month?
b) At the beginning of each six month period?