A leasing contract calls for an immediate payment of $115,000 and nine subsequent $115,000 semiannual payments at six-month intervals. What is the PV of these payments if the annual discount rate is 8%? (Hint: First find the semiannual rate that is equivalent to the annual rate.) Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
Added by Edward W.
Step 1
- The annual discount rate is 8%. To find the semiannual rate, divide the annual rate by 2: \[ \text{Semiannual rate} = \frac{8\%}{2} = 4\% = 0.04 \] Show more…
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