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FM F9 – SPOT Co. (Dec 13) – Kaplan Exam Kit

This topic has 1 reply, 2 voices, and was last updated 1 year ago by LMR1006.

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March 5, 2024 at 1:00 pm #702051
abirla
Participant
- Topics: 4
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Under part(a), when evaluating Leasing – calculation has used 1+4 year annuity for 7% DF
I am unable to understand this? Can you please explain, how is it 1yr +(1-4)yrs?
March 5, 2024 at 3:58 pm #702063
LMR1006
Keymaster
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The lease of $155000 in payable at the start of the year, which means at to, in advance
So its 155,000 * 1
155,000 * 3.387 which is 4 years at 7%
or 4.387 * 155,000
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