Air Atlantic (AA)has Been Offered a 3-Year Old Jet Airliner

Multiple Choice

Air Atlantic (AA) has been offered a 3-year old jet airliner under a 12-year lease arrangement. The lease requires AA to make annual lease payments of $500,000 at the beginning of each of the next 12 years. Determine the present value of the lease payments if AA's cost of funds is 14 percent.

A) $2,830,000
B) $13,635,500
C) $6,000,000
D) $3,226,200