A firm has agreed to lease some equipment. Terms of the lease require the firm to pay the lessor $175,000 per year for the next seven years. a. What is an annuity? Distinguish between an ordinary annuity and an annuity due. Do the cash flows described above represent an annuity? b. Compute the present value of the lease payments at 8% assuming that payments are made at the end of each year. c. Compute the present value of the lease payments at 8% assuming that payments are made at the beginning of each year

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a An annuity is a series of equal payments made or received at regular intervals over a specified pe... View the full answer