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How to calculate the equal annual payments

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Question - Sunland, Inc. manufactures machinery used in the mining industry. On January 2, 2021 it leased equipment with a cost of $540000 to Silver Point Co. The 5-year lease calls for a 20% down payment and equal annual payments at the end of each year. The equipment has an expected useful life of 5 years. If the selling price of the equipment is $840000, and the rate implicit in the lease is 7%, How to calculate the equal annual payments?

 

PV Annuity Due

PV Ordinary Annuity

PV Single Sum

7%, 5 periods

4.38721

4.10020

0.71299

9%, 5 periods

4.23972

3.88965

0.64993

Reference no: EM132516610

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