Khulna Development Authority (KDA) owns 50 hectares of valuable land has decided to lease the land to a company. The primary objective is to obtain long-term income to finance ongoing projects 5 and 15 years from the present time. KDA makes a proposal to the company that it pays $25,000 per year for 20 years beginning 1 year from now, plus $10,000 five years from now and $15,000 fifteen years from now. If the company wants to pay off its lease immediately to KDA, how much should it pay now if the investment is to make 12% per year?

Khulna Development Authority (KDA) owns 50 hectares of valuable land has decided to lease the land to a company. The primary objective is to obtain long-term income to finance ongoing projects 5 and 15 years from the present time. KDA makes a proposal to the company that it pays $25,000 per year for 20 years beginning 1 year from now, plus $10,000 five years from now and $15,000 fifteen years from now. If the company wants to pay off its lease immediately to KDA, how much should it pay now if the investment is to make 12% per year?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 17P

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