Present Value of Leased Asset
Response to the following problem:
On January 1, 2010, Ashly Farms leased a hay baler from Agrico Tractor Company. Ashly was having cash flow problems, so Agrico drew up the lease to allow Ashly to reestablish itself. The lease requires Ashly to make $3,000 payments on January 1 of each year for five years beginning in 2010. The interest rate is 12%.
Required:
Calculate the present value of the cost of the lease payments to Ashly on January 1, 2010.