1. Why are the use of financial statement important? Why do you think a financial institution might require one before loaning money to you? What kinds of information can they gather from these statements?
2. You want to lease a riding mower from Mowers, Inc.. The lease contract is in the form of 24 equal monthly payments at a 12 percent stated annual rate, compounded monthly. Because the mower costs $6000 retail, Mowers Inc. wants the present value of the lease payments to equal $6000. Suppose your first payment is due immediately. What will your monthly lease payments be? (Hint: This is an annuity due.)