Exercise 6-17 Your client, Keith Pina Leasing Company, is preparing a contract t

Question

Exercise 6-17 Your client, Keith Pina Leasing Company, is preparing a contract to lease a machine to Souvenirs Corporation for a period of 27 years. Pina has an investment cost of $428,700 in the machine, which has a useful life of 27 years and no salvage value at the end of that time. Your client is interested in earning an 12% return on its investment and has agreed to accept 27 equal rental payments at the end of each of the next 27 years. You are requested to provide Pina with the amount o each of the 27 rental payments that will yield an 12% return on investment places, e.g. 458,581.) Round actor values to 5 dec mal places, e 1 2S124 and nna, ans ver to O decimal Amount of each rental payments LINK TO TEXT Question Attempts: 0 of 3 used SAVE FOR LATER ISUBMIT ANSWER SUBMIT ANSWER

Explanation / Answer

Year DISCOUNTING Factor @ 12% 1 1/1.12^1 0.892857143 2 1/1.12^2 0.797193878 3 1/1.12^3 0.711780248 4 1/1.12^4 0.635518078 5 1/1.12^5 0.567426856 6 1/1.12^6 0.506631121 7 1/1.12^7 0.452349215 8 1/1.12^8 0.403883228 9 1/1.12^9 0.360610025 10 1/1.12^10 0.321973237 11 1/1.12^11 0.287476104 12 1/1.12^12 0.256675093 13 1/1.12^13 0.22917419 14 1/1.12^14 0.204619813 15 1/1.12^15 0.182696261 16 1/1.12^16 0.163121662 17 1/1.12^17 0.145644341 18 1/1.12^18 0.13003959 19 1/1.12^19 0.116106777 20 1/1.12^20 0.103666765 21 1/1.12^21 0.092559612 22 1/1.12^22 0.08264251 23 1/1.12^23 0.073787956 24 1/1.12^24 0.065882103 25 1/1.12^25 0.058823307 26 1/1.12^26 0.052520809 27 1/1.12^27 0.04689358 Total of Discounting factors 7.942553501 Investment cost in machine $ 428700 Rental payment for each year (428700/7.942554) $ 53975

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