**Answer:**

<u>**Task 1:**</u>

<u>**Determine the required lease payment if the lease agreement calls for 10 equal annual payments beginning immediately.**</u>

Answer: $140,100

<u>**Task 2:**</u>

<u>**Determine the required lease payment if the first of 10 annual payments will be made one year from the date of the agreement:**</u>

Answer: $152,696

<u>**Task 3:**</u>

<u>**Determine the required lease payment if the first of 10 annual payments will be made immediately and Benning will be able to sell the machine to another customer for $68,000 at the end of the 10-year lease.**</u>

<u></u>

Answer: $148,224

**Explanation:**

**Machine price = $980,000**

**Annual interest rate = 9%**

**Task 1:**

Lease payment, if the 10 payments begin immediately:

= $980,000/1+5.995 = $140,100

**Task 2:**

**Lease payments, if the first of 10 annual payments will be made one year from the date of the agreement:**

**$980,000/6.418 = $152,696**

**Task 3:**

**Present value = $980,000**

**Period = 10**

**Rate = 9%**

Residual value = $68,000

Present value of residual = $68,000* PV(9%,10) = $68,000*0.422 (from present value table) = $28,696

Annual payment = ($980,000 - $28,696)/PV(9%,10)

Annual payment = $951,304/6.418 = $148,224