Benning Manufacturing Company is negotiating with a customer for the lease of a

Question

Benning Manufacturing Company is negotiating with a customer for the lease of a large machine manufactured by Benning. The machine has a cash price of 940,000 dollars. Benning wants to be reimbursed for financing the machine at a 9% annual interest rate. (FV of 1 dollar, PV of 1 dollar, FVA of 1 dollar, PVA of 1 dollar, FVAD of 1 dollar and PVAD of 1 dollar (Use appropriate factor(s) from the tables provided.)Required: Determine the required lease payment if the lease agreement calls for 15 equal annual payments beginning immediately.

Explanation / Answer

Details Amount Present Value 9,40,000.00 n              15.00 i 9% FV F@ 9% at the end of 14th year 3.34172703 FVAF @ 9% for 14 Years 29.3609162 Annual Installment 940000/29.3609*3.3417 1,06,986.56

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