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What would payment on year lease with a constant payment

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Problem 1: Assume the prevailing interest rate is 5% per annum. A 4 -year lease agreement requires you to pay $1650 up front, followed by payments of $1650, $1650, and $1650 at the beginning of each of the following three years, respectively. What would the payment on a 4-year lease with a constant annual payment have to offer for you to be indifferent between the two lease options? Assume that the first payment on the constant annual payment lease will be made at the end of the first year, and round your answer to the nearest dollar.

Option 1: 1733
Option 2: 1650
Option 3: 1678
Option 4: 1650

Reference no: EM132765381

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