Answer the following question:

• Signed a lease for a vehicle that had an expected economic life of 8 years and a fair value of $18000.
• The lease term begins on 1 January 20X2 and runs for five years. The lease requires payments of $5,800 each 1 January, including $1,700 for maintenance and insurance costs
• At the end of the lease term, the lease is renewable for three one-year periods at $500 per year. The normal rental costs for a similar used vehicle would be approximately double this amount.
• At the end of the lease term the vehicle reverts to the lessor
• Incremental borrowing rate = 12%

Calculate PV using excel. Show two calculations for PV. First one is = - PV(12%, 5, 4100,,1).

Answer: PV = $17,316