Question

I Present and future value tables of $1 at 3% are presented below. N FV $1 PV $1 FVA $1 PVA $1 FVAD $1 1 1.03000 0.97087 1. eeee 0.97087 1.03ee 2 1.06090 0.94260 2.ee 1.91347 2.e9e9 3 1.89273 0.91514 3.0909 2.82861 3.1836 4 1.12551 0.88849 4.1836 3.71710 4.3891 5 1.15927 0.86261 5.3091 4.57971 5.4684 6 1.19405 0.83748 6.4684 5.41719 6.6625 7 1.22987 2.81309 7.6625 6.23028 7.8923 8 1.26677.78941 8.8923 7.01969 9.1591 9 1.30477 0.76642 10.1591 7.78611 10.4639 10 1.34392 0.74409 11.4639 8.5302e 11.8078 11 1.38423 0.72242 12.8078 9.25262 13.1920 12 1.42576 0.70138 14.1920 9.95400 14.6178 13 1.46853 0.68095 15.6178 10.63496 16.0863 14 1.51259 0.66112 17.0863 11.29607 17.5989 15 1.55797 0.64186 18.5989 11.93794 19.1569 16 1.60471 0.62317 20.1569 | 12.56110 20.7616 REBOVANNI PVAD $1 1.000ee 1.97087 2.91347 3.82861 4.71710 5.57971 6.41719 7.23028 8.01969 8.78611 9.53020 10.25262 10.95400 11.63496 12.29607 12.93794 در برابر من نور بر A firm leases equipment under a long-term finance lease (analogous to an installment purchase) that calls for 12 semiannual payments of 46,329.60. The first payment is due at the inception of the lease. The annual rate on the lease is 6%. What is the value of the leased asset at inception of the lease?

Answer 1

Semi annual payment = $46,329.60

Number of installments (n) = 12

Interest rate = 6% annual

Interest rate (i) = 3% semi annual

Present value annuity factor (3%,12) = 10.25262

Value of leased asset at the inception of the lease = Semi annual payment x Present value annuity factor (3%,12)

= 46,329.60 x 10.25262

= $475,000

The value of leased asset at inception of the lease $475,000

Third option is correct.

Kindly comment if you need further assistance. Thanks‼!