1. Imagine that you are considering an equipment lease (rather than a purchase) of a computer for your office. The lease terms call for a lease amount of $3,500, 3 advance payments due at signing, a residual value of $1,000 and 24 monthly payments. The lease carries an interest rate of 9% per year. How much would your monthly payments be? manually using TVM functions Lease amount Advance payment Residual value Leasing period Interest rate Lease payment Lease payment annual USD number USD months per month USD/month USD/month
1. Imagine that you are considering an equipment lease (rather than a purchase) of a computer for your office. The lease terms call for a lease amount of $3,500, 3 advance payments due at signing, a residual value of $1,000 and 24 monthly payments. The lease carries an interest rate of 9% per year. How much would your monthly payments be? manually using TVM functions Lease amount Advance payment Residual value Leasing period Interest rate Lease payment Lease payment annual USD number USD months per month USD/month USD/month
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Alternative Calculation of Monthly Lease Payment:
FV
PV
(1+ i)N
1
LP =
1
(1+i)N-A
i
+ A
where LP – monthly lease payment;
PV – the present value of the future payments on the lease,
including the residual value, i.e. it is a lease amount;
FV – the future value of leased asset or its residual value;
N- the lease term (number of months);
A - the number of payments to be paid in advance (0,1,2,...);
i- monthly interest rate (i = APR÷12).
The formula presented above can be used for any payment
frequency. Just be sure that N is the number of periods and į is the
interest rate per period.
Transcribed Image Text:1. Imagine that you are considering an equipment lease (rather than a purchase) of a computer for your office. The lease terms call for a lease amount of $3,500,
3 advance payments due at signing, a residual value of $1,000 and 24 monthly payments. The lease carries an interest rate of 9% per year. How much would your monthly
payments be?
manually
using TVM functions
Lease amount
Advance payment
Residual value
Leasing period
Interest rate
Lease payment
Lease payment
annual
USD
number
USD
months
per month
USD/month
USD/month
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