Exercise 142 Crone Co. has machinery that cost $149,000. It is to be leased for

Question

Exercise 142 Crone Co. has machinery that cost $149,000. It is to be leased for 15 years with rent received at the beginning of each year. Crone wants a return of 5% (Use the below table PRESENT VALUE OF AN ANNUITY DUE OF 1 10% 12% 15% 1.91743 2.75911 3.53130 4.23972 1.89286 2.69005 3.40183 4.03735 2 1.92593 2.78326 3.57710 4.31213 1.90909 2.71252 3.44371 4.10245 2.62571 3.28323 3.85498 3.48685 4.99271 5.62288 6.20637 6.74664 7.24689 4.88965 5.48592 6.03295 4.79079 5.35526 5.86842 6.33493 6.75902 4.69590 5.23054 5.71220 6.14612 6.53705 4.60478 5.11141 5.56376 5.96764 6.32825 4.35216 4.78448 5.16042 5.48732 5.77158 6.99525 7.41766 7.80519 8.16073 8.48690 8.78615 7.14457 7.49506 7.81369 8.10336 7.71008 8.13896 6.88923 7.20652 7.49236 6.01877 8.36669 7.74987 7.19437 6.23371 8.60608 8.82371 9.02155 9.20141 9.36492 6.93770 8.90378 9.24424 7.42355 7.62817 6.58315 6.72448 7.98187 9.55948 9.85137 10.12164 10.37189 10.60360 8.19087 8.37916 8.54879 8.70162 8.83929 7.81086 7.97399 8.11963 8.24967 8.36578 6.84737 6.95424 7.04716 7.12797 7.19823 9.06069 9.31256 9.75563 9.95012 20

Explanation / Answer

$ Cost of machinary 149000 Cumulative present value for 15 years at 5% 10.8986 Annual rent ( $ 149,000 / 10.8986 )                 13,671.48

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