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nikklg [1K]
3 years ago
5

Lane co. has a machine that cost $500,000. it is to be leased for 20 years with rent received at the beginning of each year. lan

e wants a return of 10%. calculate the amount of the annual rent.
Business
1 answer:
Pavlova-9 [17]3 years ago
3 0
Use the formula of the present value of an annuity due which is
Pv=pmt [(1-(1+r)^(-n))÷r]×(1+r)
Pv present value 500000
PMT amount of the annual rent?
R rate of return 0.1
N time 20 years

Solve the formula for PMT
PMT=pv÷[(1-(1+r)^(-n))÷r]×(1+r)
PMT=500,000÷(((1−(1+0.1)^(−20))
÷(0.1))×(1+0.1))
=53,390.73 round your answer to get 53391
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4 0
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