Any time there is a series of payments like that, it makes it an annuity. Your tables maybe say "... value of $1 at end of x payments" or something like that rather than calling it an annuity. (The NON-annuity charts just say "present/future value of $1" -- so not those.
When figuring whether it's future or present value of an annuity, think where the value is __relative to the payments__. That is, a present value is something that has a total now and the payments will *come off *that total. A future value is where you have nothing now and the payments will *grow into* the total. Which is this?
The number of periods is the same as the number of payments. But the interest rate (when using tables) has to match the periods. Your periods are semi-annual. Your interest rate is quoted *annually*. How much would that be semi-annually?
And... since the first payment is at the time of the lease "inception" that is meaning the first payment is at the beginning of the period, instead of at the end. There are different ways that can be taken care of. Check your tables and see if you have ones for "annuity due." An ordinary annuity, or just annuity, is when the payments are made at the end of the period. Payments made at the biegnning of a period is an annuity due. So if you have that table, just use it and don't worry about it. If not, I know of two other ways, but you may be required to do this a specific way and I'd rather you check your text and see if you can find an illustration of how they do this. |