On June 30, 2003, Acme Aircraft leased a jumbo jet from Airbus Corp. The terms of the lease require Acme to make: a. a ,000,000 payment on June 30, 2003; b. 20 annual payments of 0,000 on each June 30 beginning June 30, 2003; c. and a ,000,000 payment on June 30, 2005. Accounting standards require this lease to be recorded as a liability for the present value of all scheduled payments. Assume that an 8% interest rate properly reflects the time value of money in this situation. Compute the amount that Acme should record as the lease liability on June 30, 2003, before any payments are made, assuming that the first payments will be made on June 30, 2003.

I got 7,159,138.42

Only things throwing me off is of course it being uneven, and also that i am calculating it BEFORE any payments are made, so i was assuming that its going to be basically PV of an annuity due? I’m confused, and literally every example in my book is even cash flows so its way easier.

So i did it for 1 million at 1 year, plus 500,000 at 20 years, plus 1 million at 3 years. and added it together. That gave me 9,085,060.

I also entered it into the BA II Plus, and it gave me 7,159,138.42. So obviously im missing something here.

If I have an annuity and sell it for cash what is the average % of total annuity worth that they firm buying it will give me for it.
I mean like I win 0,000 in a lawsuit paid to me monthly over 10 years, How much will it cost on day 0 if I sell that annuity for a lump cash payment

Rooney, Inc. is considering the purchase of a new machine costing 0,000. The machine’s useful life is expected to be 8 years with no salvage value. The straight-line depreciation method will be used. The net increase in annual after tax cash flow is expected to be 7,000. Thomas estimates its cost of capital to be 14%. (The present value of a annuity for 8 years at 14% is 4.639, and the present value of to be received in 8 years is 0.351

The net present value of the investment in the machine under consideration is:

Thanks for the help!

The individual in question retired early and has considerable invested assets, but would prefer to keep those assets invested and get a mortgage rather than pay cash for the house. The credit rating is excellent and there is no debt. There is no income per se because all assets are invested and the individual is not yet old enough to collect Social Security or a pension. Are mortgages ever approved in this situation? If so, are there any special types of mortgage brokers or companies that do this? And are there any special terms, e.g., placing some of the assets in an annuity, that mortgage companies require? Thank you.
Thanks for the answers so far, and to respond to Jano’s question, the individual lives comfortably by drawing down on invested assets.