You are assessing the minimum amount of investment that you will be willing to invest today for a billboard construction project. The useful life of the steel structure is 10 years. Monthly advertising space rental costs P120,000. Advertising contracts requires prepayment of the lease before commencing the rental. Rental revenue will be deposited in a deposit account with 2.5% interest rate, compounded quarterly.  What is the minimum amount of investment for the billboard steel foundation today?

Bishop Sheen Hospital is evaluating a lease arrangement for its ambulance fleet.  The total value of the lease is $620,000.  The hospital will be making equal monthly payments starting today.   What is the monthly interest rate if the lease payments are $50,000 per month for 24 months? What is the monthly interest rate if the lease payments are $50,000 per month for 36 months? What is the monthly interest rate if the lease payments are $60,000 per month for 36 months?

a college can purchase a telephone system for $35000 or lease a system for 5 years for a front-end charge and regular payments of $1500 at the beginning of every quarter (including the first quarter). The system can be purchased at the end of the lease period for $3000  a) should the college lease or buy the system if it can borrow funds at 5% compounded quarterly? b) what is the current economic value of the saving with the lower cost option?

You are considering leasing a car for 48 months where the advertisement says that monthly payments are $399 with $5,000 due at signing. You have seen elsewhere that the market value of the new car is $35,000 and that the expected market value in 4 years is $25,000. What effective annual rate (EAR) are you paying for this lease?

A firm has decided to make an investment, an ordinary annuity of $10,000 per year for fifteen years. Calculate the future value of the investment at the end of fifteen years, given the firm earns 4% annual interest.

A property is available for sale that could normally be financed with a fully amortizing $80,200 loan at a 10 percent rate with monthly payments over a 25-year term. Payments would be $728.78 per month. The builder is offering buyers a mortgage that reduces the payments by 50 percent for the first year and 25 percent for the second year. After the second year, regular monthly payments of $728.78 would be made for the remainder of the loan term.   Required: a. How much would you expect the builder to have to give the bank to buy down the payments as indicated? b. Would you recommend the property be purchased if it was selling for $5,000 more than similar properties that do not have the buydown available?

Your firm needs to invest in a new delivery truck. The life expectancy of the delivery truck is five years. You can purchase a new delivery truck for an upfront cost of $250 000, or you can lease a truck from the manufacturer for five years for a monthly lease payment of $5 000 (paid at the end of each month). Your firm can borrow at 5% APR with quarterly compounding. What is the present value of lease payments? (Rounded to the nearest dollar)

Your firm is considering purchasing an old office building with an estimated remaining service life of 25 years. Recently, the tenants signed a long-term lease, which leads you to believe that the current rental income of $250,000 per year will remain constant for the first five years. Then the rental income will increase by 10% for every five-year interval over the remaining life of the asset. That is, the annual rental income would be $275,000 for years 6 through 10, $302,500 for years 11 through 15, $332,750 for years 16 through 20, and $366,025 for years 21 through 25. You estimate that operating expenses, including income taxes, will be $85,000 for the first year and that they will increase by $5,000 each year thereafter. You also estimate that razing the building and selling the lot on which it stands will realize a net amount of $50,000 at the end of the 25-year period. If you had the opportunity to invest your money elsewhere and thereby earn interest at the rate of 12% per…

A property is expected to have NOI of $100,000 the first year. The NOI is expected to increase by 5 percent per year thereafter. The appraised value of the property is currently $1.25 million and the lender is willing to make a $1,125,000 participation loan with a contract interest rate of 5.5 percent. The loan will be amortized with monthly payments over a 20-year term. In addition to the regular mortgage payments, the lender will receive 50 percent of the NOI in excess of $100,000 each year until the loan is repaid. The lender also will receive 50 percent of any increase in the value of the property. The loan includes a substantial prepayment penalty for repayment before year 5, and the balance of the loan is due in year 10. (If the property has not been sold, the participation will be based on the appraised value of the property.) Assume that the appraiser would estimate the value in year 10 by dividing the NOI for year 11 by an 8 percent capitalization rate.   Assume that another…

Jenny Enterprises has just entered a lease agreement for a new manufacturing facility. Under the terms of the agreement, the company agreed to pay rent of $12,500 per month for the next 10 years with the first payment due today. If the APR is 6.48 percent compounded monthly, what is the value of the payments today?