Your client. Albert Johnson Leasing Company, is preparing a contract to lease a machine to Souvenirs Corporation for a periodof 25 years. Johnson has an investment cost of $428.600 in the machine, which has a useful life of 25 years and no salvage value at theend of that time. Your client is interested in earning an 9% return on its investment and has agreed to accept 25 equal rental paymentsat the end of each of the next 25 yearsClick here to view factor tablesYou are requested to provide Johnson with the amount of each of the 25 rental payments that will yield an 9% return on investment.(Round factor values to 5 decimal places, eg. 1.25124 and final answer to 0 decimal places, eg 458,581)Amount of each rental payments $464143

Investment cost = $428,600Annual payment periods = 25Interest rate = 9%

Answered: Your client, Albert Johnson Leasing…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 9P

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A property owner has set up a contract in which he agrees to sell a warehouse 5 years from now to the tenant who currently leases the space. The tenant has agreed to continue to pay $20,000 in rent at the end of each year, including year five, at which time he will purchase the building for an additional $1,500,000. Assuming the required rate of return on a similar investment is 10% (annual), how much is this deal presently worth to the original owner of the property? $1,014,779.2 $1,007,197.20 $2,281,452.80 $2,293,663.00

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