Hello,

If any one could help me with this I'd be more than grateful!!. I am preparing for an exam today (Sunday) and tomorrow morning. Thanks in advance,

Allice


Gretech Inc., is preparing to lease some operational equipment that has a purchase price of $234,500. The lease will be for 6 yrs. with annual payments of $47,939 at the beginning of the year. What is the implied interest return to the lessor, ignoring any residual value.

Formula: nr1 = ((1+ Rn+1)n+1 / (1+ Rn)n ) -1)

where nr1 is the implied forward rate, Rn+1 is the actual rate of interest for an n+1 period of Treasury security and Rn is that for an n-period security.