I have tried to work back from the NPV in this question but I cannot make it to give me the correct anwer.
The question is:
A lease agreement has a net present value of 32,000 at a discount rate of 10%. The lease involves 5 equal payments, payable a the start of each year.
What is the amount of the annual payment?
I know the answer is 7,674 but I cannot get my workings to get this answer.
I would appreciate your help.
Thanks
Ask the Tutor ACCA FM
Lease NPV
As we are paying in start of the each year so 1st year lease will be paid in year 0. So 4 year's annuity factor is 3.170. 4 year annuity factor plus 1 equal to 4.170 then divide NPV by annuity factor 4.170. Then you'll find your answer.
10y ago#2mabs6601: Thank you for answering, but please do not answer in this forum because it is the Ask the Tutor Forum and you are not the tutor :-)
(But please do answer in the other F9 forum and help other students :-) )
yoli100: the answer that mabs6601 has given is correct :-)
Thanks very much!!
Regards
10y ago#4You are welcome :-)
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