Question

A lease valued at $34,000 requires payments of $5,000 every three months. If the first payment is due three years after the lease was signed and interest is 10% compounded quarterly, what is the term of the lease? (Round up to the nearest quarter.)

A) 3.75 years
B) 4 years
C) 4.25 years
D) 4.5 years

Answer 1

The term of the lease is approximately 7 quarterly payments.

Step-by-step explanation:

To find the term of the lease, we need to determine the number of payments made over the course of the lease. Since the lease requires payments of $5,000 every three months, we can divide the total value of the lease by each payment to find the number of payments:

Number of payments = $34,000 / $5,000

Number of payments = 6.8

Since we can't have a fractional number of payments, we need to round up to the nearest whole number. Therefore, the term of the lease is approximately 7 quarterly payments.