A construction company agreed to lease payments of $481.44 on construction equipment to be made at the end of every three months for 5 years. Financing is at 7% compounded quarterly. (a) What is the value of the original lease contract? (b) If, due to delays, the first 10 payments were deferred, how much money would be needed after 11 payments to bring the lease payments up to date? (c) How much money would be required to pay off the lease after 11 payments? (d) If the lease were paid off after 11 payments, what would the total interest be? (e) How much of the total interest would be due to deferring the first 10 payments? (a) The value of the original lease contract is S. (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.) (b) The company would have to pay $ (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.) (c) The company would need $ (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.) (d) The interest would be S (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.) (e) The interest resulting from the deferral is S. (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.)
A construction company agreed to lease payments of $481.44 on construction equipment to be made at the end of every three months for 5 years. Financing is at 7% compounded quarterly. (a) What is the value of the original lease contract? (b) If, due to delays, the first 10 payments were deferred, how much money would be needed after 11 payments to bring the lease payments up to date? (c) How much money would be required to pay off the lease after 11 payments? (d) If the lease were paid off after 11 payments, what would the total interest be? (e) How much of the total interest would be due to deferring the first 10 payments? (a) The value of the original lease contract is S. (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.) (b) The company would have to pay $ (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.) (c) The company would need $ (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.) (d) The interest would be S (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.) (e) The interest resulting from the deferral is S. (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.)
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 7MC: Using the information provided, what transaction represents the best application of the present...
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The term "mortgage" is a type of loan that a borrower takes to maintain his house or any form of assets and he agrees to return the amount in a particular period of time to the lender usually in a series of regular equally monthly, quarterly, or half-yearly payments.
Question
Transcribed Image Text:A construction company agreed to lease payments of $481.44 on construction equipment to be made at the end of every three months for 5 years. Financing is at 7% compounded quarterly.
(a) What is the value of the original lease contract?
(b) If, due to delays, the first 10 payments were deferred, how much money would be needed after 11 payments to bring the lease payments up to date?
(c) How much money would be required to pay off the lease after 11 payments?
(d) If the lease were paid off after 11 payments, what would the total interest be?
(e) How much of the total interest would be due to deferring the first 10 payments?
(a) The value of the original lease contract is S
(Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.)
(b) The company would have to pay $
(Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.)
(c) The company would need $
(Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.)
(d) The interest would be S|
(Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.)
(e) The interest resulting from the deferral is S
(Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.)
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