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I cannot understand the mcq
plz help me to solve this..
A lease agreement has a net present value of $26496 at a rate of 8%. The lease involves an immediate down payment of $10,000 followed by four equal payments.
What is the amount of the annual payment?A. $11020
B.$4981
C.$11513
D.$14039If the annual payment is X per year, then the PV is X x the four year annuity factor at 8%.
which is 3.312X
There is an immediate payment of 10,000. Because it is immediate it’s PV is 10,000So 3.312X + 10,000 = 26,496
3.312X = 16,496
X = 16,496 / 3.312 = $4981
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