You just signed a 30-year lease agreement for a business property.  The monthly rent for  the  first  year  is  $1,000/month,  with  the  first  month's  rent  due  today.   Starting from the second year onward, the monthly rent will be increased by 5%/year (i.e., the monthly rent for the second year will be $1,050, the monthly rent for the third year will be $1,000(1.05)^2= $1,102.5, and so on).  Assuming the annually compounded interest rate is 12%/year, what is the present value of the 360 rental payments?

Answer rating: 100% (QA)

To calculate the present value of the 360 rental payments you can use the formula for the p... View the full answer