Question: Here is a variation on challenge question 1. Suppose Magna Charter is offered a five-year cancelable lease at an annual rate of $125,000, paid in

Here is a variation on challenge question 1. Suppose Magna Charter is offered a five-year cancelable lease at an annual rate of $125,000, paid in advance. How would you go about analyzing this lease? You do not have enough information to do a full option pricing analysis, but you can calculate costs and present values for different scenarios.

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