Question
3) Consider a 66-year lease for a $500,000 bottling machine, with a residual market value of $100,000 at the end of 66 years. If the
3) Consider a 66-year lease for a $500,000 bottling machine, with a residual market value of $100,000
at the end of 66 years. If the risk-free interest rate is 5.9 % APR with monthly compounding, compute the monthly lease payment in a perfect market for the following leases:
a. A fair market value lease.
b. A $1.00 out lease.
c. A fixed price lease with an $59,000 final price.
a. A fair market value lease.
The present value of the lease payments is ______________ (Round to the nearest dollar.)
A fair market value lease would be ______________(Round to the nearest dollar.)
b. A $1.00 out lease. A $1.00 out lease would be
________________(Round to the nearest dollar.)
c. A fixed price lease with an $59,000 final price.
The present value of the lease payments is _________________(Round to the nearest dollar.)
A fixed price lease with an $59,000
final price would be _____________ (Round to the nearest dollar.)
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