Asked by
Salma Almansoori
on Dec 02, 2024
Verified
The lease on a new office requires an immediate payment of $24,000 plus $24,000 per year at the end of each of the next 10 years. At a discount rate of 14 percent, what is the present value of this stream of lease payments?
A) $130,872
B) $149,194
C) $142,710
D) $264,000
Discount Rate
The interest rate used to discount future cash flows of investments or projects to their present value, crucial for assessing their profitability.
Present Value
The modern-day worth of an upcoming sum of money or series of cash receipts, factoring in a chosen rate of return.
- Compute the present worth of future monetary streams for evaluating investment possibilities.
- Determine the valuation of leases and annuities utilizing present value computations.
Verified Answer
MV
Learning Objectives
- Compute the present worth of future monetary streams for evaluating investment possibilities.
- Determine the valuation of leases and annuities utilizing present value computations.