Catt Co.has a machine that cost $200,000.It is to be leased for 20 years with rent received at the beginning of each year.Catt wants a return of 10%.Calculate the amount of the annual rent. $$\begin{array}{l}\begin{array} { c c }
&\text { Present Value of }\

\text { Period } & \text { Ordinary Annuity } \
\hline
19 & 8.36492 \
20 & 8.51356 \
21 & 8.64869
\end{array}
\end{array}$$
A)$21,356
B)$23,909
C)$29,728
D)$23,492

Question

Catt Co.has a machine that cost $200,000.It is to be leased for 20 years with rent received at the beginning of each year.Catt wants a return of 10%.Calculate the amount of the annual rent. $$\begin{array}{l}\begin{array} { c c } 
&\text { Present Value of }\

\text { Period } & \text { Ordinary Annuity } \
\hline
19 & 8.36492 \
20 & 8.51356 \
21 & 8.64869
\end{array}
\end{array}$$
A)$21,356
B)$23,909
C)$29,728
D)$23,492

Quizplus · Accepted Answer

The present value of the annuity is $200,000. The present value of an ordinary annuity is calculated as follows:PV = R * (1 - (1 + r)^-n) / rwhere:PV is the present valueR is the annual rentr is the interest raten is the number of yearsIn this case, we have:PV = $200,000r = 10%n = 20Substituting these values into the formula, we get:$200,000 = R * (1 - (1 + 0.1)^-20) / 0.1$200,000 = R * 8.51356R = $23,492Therefore, the amount of the annual rent is $23,492.

Catt CoHas a Machine That Cost $200,000 A)$21,356 B)$23,909 C)$29,728 D)$23,492

Catt CoHas a Machine That Cost $200,000 A)$21,356
B)$23,909
C)$29,728
D)$23,492