Homework Answers
Pv of 100000 at beginning of year 1 @ 8% = $100,000*1=$100,000
Pv of 120000 at beginning of year 2 @ 8% = $120,000*0.925925=$111,111
Pv of 135000 at beginning of year 3 @ 8% = $135,000*0.857338=$115,741
Pv of 155000 at beginning of year 4 @ 8% = $155,000*0.793832=$123,044
Pv of 180000 at beginning of year 5 @ 8% = $180,000*0.735030=$132,305
So the total investment required today is $582,201 which will earn 8% interest and we can pay all the lease payments of 5 years.
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