Construction firm is considering leasing some equipment

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A construction firm is considering leasing some equipment over a ten year period under the following proposed terms from a supplier: The firm must pay today $1500, then next year (1st year) pay $700, then for second year pay $100. For the 3rd through 10th years, the firm must increase their payment by $50 relative to the previous year (e.g. 3rd year payment is $150 and 4th year is $200). The firm is not comfortable with the supplier’s proposal and makes a counter-proposal: Instead the firm pays the supplier five equal payments (EUAC) starting with the first year and no payments in years six thru ten . Assume an interest rate of 7.25%. State below the EUAC to the closest dollar.

Reference no: EM131566295

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