Question: RRK Ltd. is preparing a contract to lease a machine to JKK Corp. for a period of 15 years. RRK purchased the machine for $200,000.

RRK Ltd. is preparing a contract to lease a machine to JKK Corp. for a period of 15 years. RRK purchased the machine for $200,000. At the end of the 15-year lease, the machine will be returned to RRK and is expected to be worth $15,000 at that time. RRKs required rate of return for their investment in the leasing arrangement is 8% per year, and has agreed to accept 15 equal rental payments at the end of each of the next 15 years. What will be the lease payment at the end of each year?

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