Question: Some equipment is needed for a construction project. It can be leased for $150,000 annually, or it can be purchased for $900,000 at the beginning

Some equipment is needed for a construction project. It can be leased for $150,000 annually, or it can be purchased for $900,000 at the beginning and sold for $225,000 at the end of 3 years. What is the rate of return for owning the equipment rather than leasing it?

A lottery pays the winner $1 million in 20 equal annual payments of $50,000. The ﬁrst payment will be made at the end of the second year. What is the present worth if the winner’s annual interest rate is 5.25%?

A new road will cost $45 million to build, and $2 million annually to maintain and operate over its 50-year life. The roadbed and right-of-way are estimated to have a salvage value of $15 million. If the state highway department uses an interest rate of 5%, what is the EAC for the road?

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