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A construction company agreed to lease payments of $612.59 on construction equipment to be made at the end of every month for 9.25 years.

A construction company agreed to lease payments of $612.59 on construction equipment to be made at the end of

A construction company agreed to lease payments of $612.59 on construction equipment to be made at the end of every month for 9.25 years. Financing is at 11% compounded monthly. (a) What is the value of the original lease contract? (b) If, due to delays, the first 9 payments were deferred, how much money would be needed after 10 payments to bring the lease payments up to date? (c) How much money would be required to pay off the lease after 10 payments? (d) If the lease were paid off after 10 payments, what would the total interest be? (e) How much of the total interest would be due to deferring the first 9 payments ?

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SOLUTION To solve this problem we can use the formula for the present value of an ordinary annuity PV PMT 1 1 rn r where PV is the present value or the value of the original lease contract PMT is the ... blur-text-image

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