Mock Exam MCQ's

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August 25, 2015 at 9:43 am #268448
Mujtaba
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1.A company has agreed to lease a machine for a period of 8 years,with equal annual payments payable at the start of each year.
The NPV of the agreement at a rate of 10% is $ 52000.
What is the annual lease payment?
1.$8208
2.$13444
3.$8862
4.$9747
Correct answer $8862
please show working. Thanks
August 25, 2015 at 7:26 pm #268508
lavinia69
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52,000/5.868=8862 (rounded)
The 5.868 is got to by using your annuity table at 10% at 7 years = 4.868 plus 1.000 as this question is making the payment at the start of the year therefore the first payment is at year 0
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