Example 7 says that the lease payments are due at the end of the lease period, would that not mean all 10m falls due in 10 years to the PV should be £6,139,132?

Lease term is 10 years. at the end of each year 1m is paid. This is an annuity payment so you use the annuity pv formula. ?1m * (1 – ((1+r) power of -n)/ r) or just search annuity present value formula.

wgk says

The lease payments are made at the end of each year and the $7.72 is correct.

1 1 0.95

2 1 0.91

3 1 0.86

4 1 0.82

5 1 0.78

6 1 0.75

7 1 0.71

8 1 0.68

9 1 0.64

10 1 0.61

7.72

dazzah666 says

Example 7 says that the lease payments are due at the end of the lease period, would that not mean all 10m falls due in 10 years to the PV should be £6,139,132?

tumbahangphe@hotmail.com says

Lease term is 10 years.

at the end of each year 1m is paid.

This is an annuity payment so you use the annuity pv formula. ?1m * (1 – ((1+r) power of -n)/ r) or just search annuity present value formula.

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