Question
Assume the following: a. 10 year lease b. payments of 5,000 happen quarterly c. Annual market rate of interest is 6% d. There is a
Assume the following:
a. 10 year lease
b. payments of 5,000 happen quarterly
c. Annual market rate of interest is 6%
d. There is a bargain purchase option (BPO) of $30,000
The first 5 lines of the worksheet should have the following information with labels in column A and the numerical value (or formula to calculate the numerical value in column B.
Number of compounding periods
Principal amount (in other words the BPO)
Interest Rate (adjusted to periodic amount)
Quarterly payment
Calculation of the pv of the annuity and the BPO. You can do this in two formulas or one, your choice. If you use two, add these together.
. If you use two, add these together.
The table shall contain 5 columns beginning after row 5.
Col 1: Beginning Book Value
Col 2: Interest Expense
Col 3: Cash flow or payment
Col 4: Reduction in Principal
Col 5: Ending book value
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