Sandra has just signed a 7-year lease for her new business. The full annual lease amount is due at the beginning of every year and such cash flows have been agreed to be 17030 dollars now and the subsequent payments to increase by 4% per year until maturity. Given that the prevailing average market interest rate is 8% per year compounded monthly, compute the present value of this financial asset.
Sandra has just signed a 7-year lease for her new business. The full annual lease amount is due at the beginning of every year and such cash flows have been agreed to be 17030 dollars now and the subsequent payments to increase by 4% per year until maturity. Given that the prevailing average market interest rate is 8% per year compounded monthly, compute the present value of this financial asset.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Sandra has just signed a 7-year lease for her new business. The full annual lease amount is due at the beginning of every year and such cash flows have been agreed to be 17030 dollars now and the subsequent payments to increase by 4% per year until maturity. Given that the prevailing average market interest rate is 8% per year compounded monthly, compute the present value of this financial asset. (note: round your answer to the nearest cent and do not include spaces, currency signs, or commas)
The answer is 105913.82, I'm just not sure how to get there.
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