Time line of cash flow and the present value of an annuity

due.

Mauer Mining Company leases a special drilling press with annual payments of

$100,000. The contract calls for rent payments at the beginning of each year for a minimum of 10 years. Mauer Mining can buy a similar drill for $790,000, but it will need to borrow the funds at 6%.

b.Determine the present value of the lease payments at 6%.

c.Should Mauer Mining lease or buy this drill?

b.What is the present value of the lease payments at 6% interest rate?

$nothing (Round to the nearest cent.)