Jeremy Leasing purchases and then leases small aircraft to i

Jeremy Leasing purchases and then leases small aircraft to interested parties. The company is currently determining the required rental for a small aircraft that cost $800,000. If the lease is for twenty years and annual lease payments are required to be made at the end of each year, what will be the annual rental if Jeremy wants to earn a return of 10%? Select one: a. $85,427 b. $93,968. c. $40,419. d. $13,968.

Solution

Annual rental = 800000/PV factor of $ 1 annuity = 800000/8.513564= 93968 Option B is correct