1. **State the problem:** Calculate the implied interest rate (Internal Rate of Return, IRR) for a purchase price of Tk. 210,000, a 5-year lease period, annual lease payment of Tk. 45,000, and an expected residual value of Tk. 25,000. 2. **Calculate the Annual Lease Rate (ALR):** $$\text{ALR} = \frac{\text{Annual Lease Payment}}{\text{Purchase Price}} \times 100 = \frac{45,000}{210,000} \times 100 = 21.43\%$$ 3. **Use the Profitability Table values:** - Present Value Interest Factor of Annuity Due (PVIFAD) at 10% for 5 years = 4.1699 - Present Value of lease payments at 10% = $45,000 \times 4.1699 = 187,646$ - Present Value of residual value at 10% = $25,000 \times 0.6209 = 15,523$ - Total Present Value at 10% = $187,646 + 15,523 = 203,169$ - PVIFAD at 5% for 5 years = 4.5460 - Present Value of lease payments at 5% = $45,000 \times 4.5460 = 204,588$ - Present Value of residual value at 5% = $25,000 \times 0.7835 = 19,588$ - Total Present Value at 5% = $204,588 + 19,588 = 224,158$ 4. **Interpretation:** - The purchase price is Tk. 210,000. - The total present value at 10% (203,169) is less than the purchase price. - The total present value at 5% (224,158) is greater than the purchase price. 5. **Estimate the IRR:** Since the present value at 10% is less than the purchase price and at 5% is greater, the IRR lies between 5% and 10%. 6. **Using linear interpolation:** $$\text{IRR} = 5\% + \frac{210,000 - 203,169}{224,158 - 203,169} \times (10\% - 5\%)$$ $$= 5\% + \frac{6,831}{20,989} \times 5\% = 5\% + 1.63\% = 6.63\%$$ **Final answer:** The implied interest rate (IRR) is approximately **6.63%**.