Lane co. has a machine that cost $500,000. it is to be leased for 20 years with rent received at the beginning of each year. lane wants a return of 10%. calculate the amount of the annual rent.

Use the formula of the present value of an annuity due which is

Pv=pmt [ (1 - (1+r) ^ (-n)) : r] * (1+r)

Pv present value 500000

PMT amount of the annual rent?

R rate of return 0.1

N time 20 years

Solve the formula for PMT

PMT=pv:[ (1 - (1+r) ^ (-n)) : r] * (1+r)

PMT=500,000: (((1 - (1+0.1) ^ (-20))

: (0.1)) * (1+0.1))

=53,390.73 round your answer to get 53391