A company leased a storage yard from a city and prepaid the rent for 6 years; the terms of the lease permit the company to continue to rent the site of 6 years more by payment of $5,000 at the beginning of each year of the second 6-year period. Two years of the prepaid period have expired and the city is in need of funds; it proposed to the company that it now prepay the rental that was to have been paid year by year in the second 6-year period. If interest is figured at 4%, what is a fair payment to be made now in lieu of these six annual payments?
A company leased a storage yard from a city and prepaid the rent for 6 years; the terms of the lease permit the company to continue to rent the site of 6 years more by payment of $5,000 at the beginning of each year of the second 6-year period. Two years of the prepaid period have expired and the city is in need of funds; it proposed to the company that it now prepay the rental that was to have been paid year by year in the second 6-year period. If interest is figured at 4%, what is a fair payment to be made now in lieu of these six annual payments?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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A company leased a storage yard from a city and prepaid the rent for 6 years; the terms of the lease permit the company to continue to rent the site of 6 years more by payment of $5,000 at the beginning of each year of the second 6-year period. Two years of the prepaid period have expired and the city is in need of funds; it proposed to the company that it now prepay the rental that was to have been paid year by year in the second 6-year period. If interest is figured at 4%, what is a fair payment to be made now in lieu of these six annual payments?
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