What will the future value of the payments accumulate

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Reference no: EM133042660

Problem - The surgery center's building in downtown Charleston has an attached garage, but CPSC employees and patients use only about 50 percent of the garage's space. Meredith is under discussions to lease the unneeded garage space for five years to a local business. The lessee's cash flow needs can be accommodated by allowing the lease payments to vary as follows:

End of Year

Net Cash Flow

Year 1

$25,000

Year 2

$30,000

Year 3

$35,000

Year 4

$40,000

Year 5

$25,000

Required -

a. What is the present value of the proposed lease payments at Year 0 if the required rate of return is 10 percent annually?

b. If the proposed lease payments are invested at 10 percent annually, what will the future value of the payments accumulate to at the end of Year 5?

Reference no: EM133042660

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