Mr. Grady agrees to lease a certain property for 10 years, at the following annual rental, payable in advance:
Years 1 and 2—$1,000 per year
Years 3 to 6—$2,000 per year
Years 7 to 10—$2,500 per year
What single immediate sum will pay all of these rents, discounted at
a. 6% per year?
b. 8% per year?
c. 10% per year?
Required:
Calculations of present and future value (or single payments and for annuities, to make the exercises more realistic, we do not give specific guidance with each individual exercise.