1. **State the problem:** Calculate the rental factor $a$ and monthly rent for the first item: Regional Jet (Lower Cost, Shorter Term) with Equipment Cost $7,500,000$, Term 5 years, and Annual Interest Rate 9.50%. 2. **Formulas and rules:** - Present Value (PV) is the Equipment Cost. - Total Payments $n = \text{Term in years} \times 12$ months. - Monthly Interest Rate $i = \frac{\text{Annual Interest Rate}}{12}$, rounded to 4 decimal places. - Rental factor $a = \frac{i}{1 - (1 + i)^{-n}}$. - Monthly Rent $= PV \times a$. 3. **Calculate variables:** - $PV = 7,500,000$ - $n = 5 \times 12 = 60$ - Annual Interest Rate = 9.50\% = 0.095$ - $i = \frac{0.095}{12} = 0.0079167$, rounded to 4 decimals: $i = 0.0079$ 4. **Calculate rental factor $a$:** $$a = \frac{0.0079}{1 - (1 + 0.0079)^{-60}}$$ Calculate denominator: $$1 + 0.0079 = 1.0079$$ $$1.0079^{-60} = \frac{1}{1.0079^{60}}$$ Calculate $1.0079^{60}$: $$1.0079^{60} \approx e^{60 \times \ln(1.0079)}$$ $$\ln(1.0079) \approx 0.00787$$ $$60 \times 0.00787 = 0.4722$$ $$e^{0.4722} \approx 1.603$$ So, $$1.0079^{-60} = \frac{1}{1.603} \approx 0.624$$ Denominator: $$1 - 0.624 = 0.376$$ Therefore, $$a = \frac{0.0079}{0.376} \approx 0.0210$$ 5. **Calculate monthly rent:** $$\text{Monthly Rent} = 7,500,000 \times 0.0210 = 157,500$$ **Final answers:** - Rental factor $a \approx 0.0210$ - Monthly rent $= 157,500$ This means the lessee pays approximately 157,500 per month for 60 months to cover the equipment cost and interest.