An investor has the opportunity to buy a long-term sub-lease contract that calls for 20 semi-annual payments of $18,000 each. Payments on the sub-lease are to be made at the beginning of each semi- annual period, commencing on the date that the leasehold interest is purchased. The investor desires a minimum yield of 6% per annum, compounded annually. 7. What type of annuity is described by the above facts? (1) Ordinary simple annuity (2) General annuity due (3) Simple annuity due (4) Ordinary general annuity
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- For each lease structure below, calculate the effective net rent to the owner (after expenses) for each lease alternative using a 10 percent discount rate. Calculate each for years 1-5. (HINT: Below each scenario, set up the net rent to be realized in each year and find the present value of the net rental income. Then calculate the equivalent level annuity with the same present value. This is the net effective rent. The net effective rent amounts to an annualized equivalent of the present value). Net lease with steps Net lease with CPI adjustments Gross Lease Gross lease with expense stop and CPI adjustment Rent will be $15 per square foot for the first year and will increase by $1.50 per square foot each year until the end of the lease. All operating expenses will be paid by the tenant. Calculate for years 1-5. The rent will be $16 per square foot for the first year. After the first year, the rent will be increased by the amount of any increase in the CPI. The CPI is expected to…A company will receive payments of $1,500 per year for the next four years under a subscription contract. The first payment will be made at the beginning of the contract. Assuming an annual interest rate of 3% is appropriate, the present value of an ordinary annuity is 3.71710 x $1,500 = $5,576, and the present value of an annuity due is 3.82861 x $1,500 = $5,743. Which amount must the company record for this sale in accordance with generally accepted accounting principles (GAAP) if collection is reasonably assured? $0 $5,576 $6,000 $5,743A contract requires lease payments of $800 at the beginning of every month for 6 years. a. What is the present value of the contract if the lease rate is 4.25% compounded annually? $0.00 Round to the nearest cent b. What is the present value of the contract if the lease rate is 4.25% compounded monthly? $0.00 Round to the nearest cent
- A contract requires lease payments of $900 at the beginning of every month for 5 years. a. What is the present value of the contract if the lease rate is 5.50% compounded annually? b. What is the present value of the contract if the lease rate is 5.50% compounded monthly?What is the present value (PV) of a 12-year lease arrangement with an interest rate of 7.5 percent that requires annual payments of $4,250 per year with the first payment being due now?Suppose a borrower makes a $100,000 loan with annual payments at a 10 percent rate and a 10-year term. The loan is fully amortizing; however, payments are made on an annual basis to simplify the initial illustration. How the annual loan payment is calculated?
- Annuity payments are assumed to come at the end of each payment period (termed an ordınary onnuity), However, an exception occurs when the annuity payments come t the beginning of each period (termed an annuity due). What is the future value of a 12-year annuity of $1,400 per period where payments come at the beginning of each period? The interest rate is 7 percent. Use Appendix C for an approximate answer, but calculate your final answer using the formula and financial calculator methods. To find the future value of an annuity due when using the Appendix tables, add 1 to n and subtract 1 from the tabular value For example, to find the future value of a $100 payment at the beginning of each period for five periods at 10 percent, go to Appendix C for n= 6 and / 10 percent. Look up the value of 7716 and subtract 1 from it for an answer of 6.716 or $671.60 ($100 x 6716). (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Future valueA contract requires lease payments of $700 at the beginning of every month for 5 years. a. What is the present value of the contract if the lease rate is 3.25% compounded annually? Round to the nearest cent b. What is the present value of the contract if the lease rate is 3.25% compounded monthly?Use aspreadsheet to create amortization schedules for the following five scenarios.What happens to the total interest paid under each scenario?a. Scenario 1:Loan amount: $1 millionAnnual rate: 5 percentTerm: 360 monthsPrepayment: $0b. Scenario 2: Same as 1, except annual rate is7 percentc. Scenario 3: Same as 1, except term is 180monthsd. Scenario 4: Same as 1, except prepayment is$250 per monthe. Scenario 5: Same as 1, except loan amount is$125,000
- The term of a lease contract are as follows: Annual lease = ₱ 1.50M, first payment upon start of the lease, annual lease increase by 10% each year for 4 years. A single lump sum payment is acceptable atthe start of the lease based on an interest rate of 15 % compounded quarterly. Find the amount of this lump sum.Suppose an annuity at 5% compounded semi-annually will pay $5000 at the end of each 6-month period for 7 years with the first payment deferred for 13 years.(a) What is the number of payment periods and the number of deferral periods?(b) What is the interest rate per period?(c) Find the present value of this annuity.3. A contract requires lease payments of $800 at the beginning of every month for 4 years a. What is the present value of the contract if the lease rate is 3.50% compounded annually? b. What is the present value of the contract if the lease rate is 3.50% compounded monthly? Kindly add all the decimals DO NOT ROUND