Rabbit Inc. has an asset with an FMV of $450,000 that it wishes to lease. Rabbit's wants to recover its net investment in the leased asset and earn 8%. The asset will revert to Rabbit's at the end of a 5-year lease term and the residual value of the asset is expected to be $20,000 at the end of the lease. 

If Rabbit wants to collect rent semi-annually from the beginning of the lease, what should be the amount of the lease payments ?

Answer rating: 100% (QA)

To calculate the amount of lease payments we can use the present value of an annuity formula The for... View the full answer