Question

On June 1, 2024, Irvine leased a building. The lease agreement calls for Irvine to make lease payments of $3,649.26 each month for the next two years, with the first lease payment beginning on June 30. The company's normal borrowing rate is 8%. What is the total amount of lease payments that Irvine will make over the two-year period?

1) $87,582.24
2) $87,582.48
3) $87,582.72
4) $87,582.96

Answer 1

The total lease payments Irvine will make over the two-year period is the product of the monthly lease payment of $3,649.26 and the number of months in the period, resulting in $87,582.24.

Step-by-step explanation:

To calculate the total amount of lease payments that Irvine will make over the two-year period, we simply need to multiply the monthly lease payment by the number of months in the two-year period. Irvine is contracted to pay $3,649.26 every month for 24 months (2 years). Therefore, the total lease payment can be calculated as follows:

Total lease payments = Monthly lease payment * Number of payments

Total lease payments = $3,649.26 * 24

Total lease payments = $87,582.24

Hence, the correct answer to the amount that Irvine will pay over the two-year lease period is: 1) $87,582.24.