Edward Financing leases airplanes to airline companies. Edward has just signed a

Question

Edward Financing leases airplanes to airline companies. Edward has just signed a 20?-year lease agreement that requires annual lease payments of $ 1,000,000. What is the present value of the lease using a 6?% interest? rate? (SEE TABLES BELOW)

Edward Financing leases ar anes to arine companies. Edward has us signed a 20-year lease agreemen that requires annual ease payments o S1 00 the lease payments occur at the end of each year. Use factor amounts rounded to three decimal places, X.XXx.) ? (Click the loon to view the Present Value of $1 table.) Click the loon to view the Present Value of Annuity 0151 table) 000 hat is he present value o e ease using a 6% terest rate? Assume O A. $11,470,000 OB. S312.000 ? C. $3,120,000 OD, $114,700,000

Explanation / Answer

Present value of annual lease payments=$1,000,000*Present value of annuity factor(6%,20)

=$1,000,000*11.470

which is equal to

=$11,470,000.

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