Smith Financing Leases Cars to Car Rental Companies $$2,173,750
D)$1,588,600

question 39

Multiple Choice

Smith Financing leases cars to car rental companies.Smith has just signed a 5-year lease agreement that requires annual year-end lease payments of $470,000.The present value of $1 for 5 periods at 6% is 0.747.The present value of an ordinary annuity of $1 for 5 periods at 6% is 4.212.What is the present value of the lease when the lease commences using a 6% interest rate?

• A)$1,979,640
• B)$2,350,000
• C)$$2,173,750
• D)$1,588,600

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