Determine the present value of the lease payments

Assignment Help Financial Management

Reference no: EM131185270

Air atlantic (AA) has been offered a 3-year old jet airliner under a 12-year lease arrangement. The lease requires AA to make annual lease payments of $500,000 at the beginning of each of the next 12 years. Determine the present value of the lease payments if the opportunity cost of funds is 14%.

Reference no: EM131185270

Questions Cloud

Uses percentage-of-sales method to estimate uncollectibles : Bigg and Talle Corporation uses the percentage-of-sales method to estimate uncollectibles. Net credit sales for the current year amount to $5,000,000 and management estimates 2% will be uncollectible. Allowance for Doubtful Accounts prior to adjustme..

How much are current assets-company quick ratio : A firm’s balance sheet contains $320 of cash, $2,000 of fixed assets, $1,380 of accounts receivable, $780 of accounts payable, $500 of inventory, and $1,000 on a revolving line of credit. Assuming that list contains all of the company’s assets and li..

Observe news reports about financial markets : If you observe news reports about financial markets for some time, you will notice that investors pay a tremendous amount of attention to economic data releases from thee government. Why do you think this is the case? What are investors concerned abo..

Under the direct write-off method : Under the direct write-off method, the entry to write off an uncollectible account of $3,400 includes a:

Determine the present value of the lease payments : Air atlantic (AA) has been offered a 3-year old jet airliner under a 12-year lease arrangement. The lease requires AA to make annual lease payments of $500,000 at the beginning of each of the next 12 years. Determine the present value of the lease pa..

Consumer protection laws have proliferated : In the 20th and 21st century, consumer protection laws have proliferated. Do you think that these laws have become overly burdensome for businesses to comply with?

How much of first payment is interest only : Suppose you are buying your first condo for $150,000, and you will make a $15,000 down payment. You have arranged to finance the remainder with a 30-year, monthly payment, amortized mortgage at a 4.5% nominal interest rate, with the first payment due..

What was the annual change in the average selling price : In October 2012, the average house price in the United States was $208,600. In October 2004, the average price was $282,300. Required: What was the annual change in the average selling price?

Calculate the initial price and new price : A bond’s credit rating provides a guide to its risk. Long-term bonds rated Aa currently offer yields to maturity of 5.1%. A-rated bonds sell at yields of 5.4%. Assume a 10-year bond with a coupon rate of 4.6% is downgraded by Moody’s from Aa to A rat..

User Account

All Pages