If a machine costs $50,000 and $5,000 a year for the lessor to maintain and insure, what
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Question:
If a machine costs $50,000 and $5,000 a year for the lessor to maintain and insure, what equivalent annual cost would serve as the basis of a full-service lease payment for a 6 year operating lease, paid in arrears, if the lessor's cost of capital is 8 percent? What if the payment were made in advance, at the beginning of the year?
For this question, I received the answer earlier but I wasn't sure where the A/P and P/A came from. As well, the 0.2163 and 3.993?
Thanks in advance
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