Tanko Financing Leases Phones to Various Companies for Business Use

question 38

Multiple Choice

Tanko Financing leases phones to various companies for business use.Tanko has just signed a 2-year lease agreement that requires annual year-end lease payments of $340,000.The present value of $1 for 2 periods at 5% is 0.907.The present value of an ordinary annuity of $1 for 2 periods at 5% is 1.859.What is the present value of the lease when the lease commences using a 5% interest rate?

• A)$680,000
• B)$340,000
• C)$632,060
• D)$308,380

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