Joe’s Dockyard is leasing a new boat over the next 10 years in 10 annual installments of $3,576.71 each.

Joe’s Dockyard is leasing a new boat over the next 10 years in 10 annual installments of $3,576.71 each. The boat will have no value after 10 years. If they bought the boat with cash, it would cost $24,000. What is the implied interest rate on the lease? (Hint: it is a lease.)

Expert Solution

Putting into a financial calculator;

PV=24,000

N=10

PMT=-3576.71

Solving for I/Y;we get

I/Y=8%

jeff jeffy answered 2 years ago

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