Jack Sawyer is presently leasing a copier from John Office Equipment Company. Th

Question

Jack Sawyer is presently leasing a copier from John Office Equipment Company. The lease requires 11 annual payments of $4,500 at the end of each year and provides the leaser (John) with an 8% return on its investment. You may use the following 8% interest factors:


9 Periods

10 Periods

11 Periods

Future Value of 1

1.99900

2.15892

2.33164

Present Value of

.50025

.46319

.42888

Future Value of

12.48756

14.48656

16.64549

Ordinary Annuity of 1







Present Value of

6.24689

6.71008

7.13896

Ordinary Annuity of 1







Present Value of

6.74664

7.24689

7.71008

Annuity Due of 1


Instructions
(a) Assuming the computer has an eleven-year life and will have no salvage value at the expiration of the lease, what was the original cost of the copier to John?
(b) What amount would each payment be if the 11 annual payments are to be made at the beginning of each period?

Explanation / Answer

values given for 11 periods andpresent value of ordinary annuity of 1, the PV factor is 7.13896 The original cost of the copier = 3,500 X 7.13896 = $24,986.36

Related Questions

Navigate

• Browse (All)
• Browse J
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.