The Justin Company has just made a big sale and wants to pay its rent for...
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The Justin Company has just made a big sale and wants to pay its rent for the whole year in advance while it has the money to do so. Previously, Justin has paid $2,000 in rent every month. Assuming an annual interest rate of 6%, what single sum of money should Justin be willing to pay? (Note: Since the rent payments are due at the beginning of the month, the assumption of payments at the end of each period calls for an adjustment to be made in the present value calculation.) The Justin Company has just made a big sale and wants to pay its rent for the whole year in advance while it has the money to do so. Previously, Justin has paid $2,000 in rent every month. Assuming an annual interest rate of 6%, what single sum of money should Justin be willing to pay? (Note: Since the rent payments are due at the beginning of the month, the assumption of payments at the end of each period calls for an adjustment to be made in the present value calculation.)
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Answer rating: 100% (QA)
Since Justin is paying the rent in advance we can use the present value formula to find the lump sum ... View the full answer
Related Book For
Foundations of Financial Management
ISBN: 978-1259024979
10th Canadian edition
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta
Posted Date:
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