Question
A tenant wants to lease a building for $52,000 per year. She signs a five-year rental agreement that states that she will pay $26,000 every
A tenant wants to lease a building for $52,000 per year. She signs a five-year rental agreement that states that she will pay $26,000 every six months for the next five years. Which of the following is the timeline for her rental payments, assuming she makes the first payment immediately?
A.
| Date (years) | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 3 1/2 | 4 | 4 1/2 | 5 |
| Cash Flows (thousands) | $ 26$26 | $ 26$26 | $ 26$26 | $ 26$26 | $ 26$26 | $ 26$26 | $ 26$26 | $ 26$26 | $ 26$26 | $ 26$26 | $ 26$26 |
B.
| Date (years) | 0 | 1 | 2 | 3 | 4 | 5 |
| Cash Flows (thousands) | minus$ 52$52 | minus$ 52$52 | minus$ 52$52 | minus$ 52$52 | minus$ 52$52 | minus$ 52$52 |
C.
| Date (years) | 0 | 1/2 | 1 | 1 1/2 | 2 | 2 1/2 | 3 | 3 1/2 | 4 | 4 1/2 | 5 |
| Cash Flows (thousands) | minus$ 26$26 | minus$ 26$26 | minus$ 26$26 | minus$ 26$26 | minus$ 26$26 | minus$ 26$26 | minus$ 26$26 | minus$ 26$26 | minus$ 26$26 | minus$ 26$26 | 0 |
D.
| Date (years) | 0 | 1 | 2 | 3 | 4 | 5 |
| Cash Flows (thousands) | $ 52$52 | $ 52$52 | $ 52$52 | $ 52$52 | $ 52$52 | $ 52$52 |
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Handbook Of The Fundamentals Of Financial Decision Making
Authors: Leonard C MacLean, William T Ziemba
1st Edition
9814417343, 978-9814417341
