Question

Jenny Enterprises has just entered a lease agreement for a new manufacturing facility. Under the terms of the agreement, the company agreed to pay rent of $10,000 per month for the next 5 years with the first payment due today. If the APR is 5.88 percent compounded monthly, what is the value of the payments today?

Answer 1

Answer:

The value of the payments today is $521,293.39

Explanation:

The computation is shown in the attachment. Kindly see it below:

Given that,  

Future value = $0

Rate of interest = 5.88% ÷ 12 months = 0.49%

NPER = 5 years × 12 months = 60

PMT = $10,000

The formula is shown below:

= PV(Rate;NPER;PMT;FV;type)

So, after solving this, the present value is $521,293.39