Question - Jack Sawyer is presently leasing a copier from John Office EquipmentCompany. The lease requires 11annual payments of $4,500 at the end of each year and provides the leaser (John) with an 8%return on its investment. You may use the following 8% interest factors: 9 Periods 10 Periods 11Periods Future Value of 1 1.99900 Present Value of 1 .50025 Future Value of 12.48756 Ordinary Annuity of 1 Present Value of 6.24689 Ordinary Annuity of 1 Present Value of 6.74664 Annuity Due of 1 2.15892 .46319 14.48656 6.71008 7.24689 2.33164 .42888 16.64549 7.13896 7.71008
Instructions
(a) Assuming the computer has an eleven-year life and will have no salvage value at the expiration of the lease, what was the original cost of the copier to John?
(b) What amount would each payment be if the 11 annual payments are to be made at the beginning of each period?