Final answer:
The present value of the contract with lease payments of $800 per month for 9 years at an interest rate of 5.50% compounded monthly is $73,146.76.
Step-by-step explanation:
To find the present value of the contract, we need to calculate the present value of each lease payment and then sum them up.
The formula to calculate the present value of a future payment is:
PV = PMT * (1 - (1 + r) ^ -n) / r
Where PV is the present value, PMT is the payment amount, r is the interest rate per period, and n is the total number of periods.
In this case, the lease payments are $800, r is 5.50% (or 0.055) compounded monthly, and there are 9 years (or 108 months) of payments.
Using the formula, we can calculate the present value:
PV = $800 * (1 - (1 + 0.055/12) ^ (-108)) / (0.055/12) = $73,146.76
Therefore, the present value of the contract is $73,146.76.