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.
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
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.
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