Given the lease payments, years remaining until the lease expires, and discount
ID: 2640334 • Letter: G
Question
Given the lease payments, years remaining until the lease expires, and discount rates shown in the following table, calculate the capitalized value of each lease. Assume that lease payments are made at the beginning of each year.
Lease
Lease payment
Remaining Term (Years)
Discount Rate
A
$40,000
12
10%
B
$120,000
8
12%
C
$9,000
18
14%
D
$16,000
3
9%
E
$47,000
20
11%
Lease
Lease payment
Remaining Term (Years)
Discount Rate
A
$40,000
12
10%
B
$120,000
8
12%
C
$9,000
18
14%
D
$16,000
3
9%
E
$47,000
20
11%
Explanation / Answer
The formula to calculate the capitalized value of each lease when the lease payments are made at the beginning of each year = PMT * [{1