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Lease NPV

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › Lease NPV

  • This topic has 4 replies, 3 voices, and was last updated 7 years ago by John Moffat.
Viewing 5 posts - 1 through 5 (of 5 total)
  • Author
    Posts
  • November 21, 2015 at 4:56 pm #284375
    yoli100
    Member
    • Topics: 2
    • Replies: 3
    • ☆

    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

    November 21, 2015 at 5:48 pm #284376
    mabs6601
    Member
    • Topics: 0
    • Replies: 1
    • ☆

    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.

    November 21, 2015 at 5:59 pm #284382
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51583
    • ☆☆☆☆☆

    mabs6601: 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 🙂

    November 23, 2015 at 8:14 pm #284785
    yoli100
    Member
    • Topics: 2
    • Replies: 3
    • ☆

    Thanks very much!!
    Regards

    November 24, 2015 at 8:09 am #284839
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51583
    • ☆☆☆☆☆

    You are welcome 🙂

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