Determine the fair value of the contract

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Question - The Company is going to rent a machine in the next 3 years. The annual rental fee is 4 946 012$. If the contract is canceled, the company has to pay 100 000 000$ penalty, and at the end the company has to give the machine back. The actual market interest rate is 10%. Determine the fair value of the contract and record the above transactions in the first year.

Reference no: EM132950571

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