TVM61 - Compute Rents of Leased Equipment

Audio Transcript

ABC Co. has a machine that cost $600,000. It is to be leased for 15 years with rent received at the beginning of each year. ABC wants a return of 9.5%. Compute the amount of the annual rent.

 

Compute the annual rents of leased equipment

 

Enter the known variables.

The present value, PV, is $600,000.

The rate is 9.5%.

The number of periods, NPER, is 15.

The Type = 1, since payment is at the beginning of the year

We go to the Formulas tab and look for the PMT function.

We click on PV,

We click on rate,

We click on NPER.

We click on TYPE

Click OK

The payment, PMT, is -$69,997