Answer:
The Present value of the lease payment is $ 6,713.28
Explanation:
Given as :
The payment amount at the end of every months = $ 220
The total months = 48 months , i.e 4 years
The rate of compounded yearly = 12 %
Let The present principal value = P
∵ $ 220 is the payment at the end of 48 months
∴ Total amount in 48 months = $ 220 × 48 = $ 10,560
Now , <u>from compounded method</u>
The Amount after 48 months = Present value ×
So , $ 10,560 = P ×
Or, $ 10,560 = P ×
So , $ 10,560 = P × 1.573
∴ P = = $ 6,713.28
Hence The Present value of the lease payment is $ 6,713.28 Answer