Question

"The Lancer Leasing Company has agreed to lease a hydraulic trencher to the Chavez Excavation Company for $20,000 a year over the next eight years. Lease payments are to be made at the beginning of each year. Assuming that Lancer invests these payments at an annual rate of 9 percent, how much will it have accumulated by the end of the eight year?"

Answer 1

Answer:

FV= $220,569.48

Explanation:

Giving the following information:

Annual deposit= $20,000

Interest rate= 9%

Number of periods= 8

To calculate the future value, we need to use the following formula:

FV= {A*[(1+i)^n-1]}/i

A= annual deposit

FV= {20,000*[(1.09^8) - 1]} / 0.09

FV= $220,569.48