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Annuity

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › Annuity

  • This topic has 3 replies, 2 voices, and was last updated 7 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • November 26, 2015 at 7:43 pm #285584
    atif2017
    Member
    • Topics: 7
    • Replies: 9
    • ☆

    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.$14039

    November 27, 2015 at 7:23 am #285633
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51532
    • ☆☆☆☆☆

    If 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 10,000

    So 3.312X + 10,000 = 26,496

    3.312X = 16,496

    X = 16,496 / 3.312 = $4981

    November 27, 2015 at 9:28 pm #285814
    atif2017
    Member
    • Topics: 7
    • Replies: 9
    • ☆

    Thankyou:-)

    November 28, 2015 at 8:13 am #285847
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51532
    • ☆☆☆☆☆

    You are welcome 🙂

  • Author
    Posts
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