Ryan secured a lease on a machine by paying $1,350 as a down payment and then $900 at the beginning of every month for 5 years. The lease rate was 4.50% compounded monthly. a. What was the principal amount of the lease?

Ryan secured a lease on a machine by paying $1,350 as a down payment and then $900 at the beginning of every month for 5 years. The lease rate was 4.50% compounded monthly. a. What was the principal amount of the lease?

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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Concept explainers

Leasing

Leasing is a contractual arrangement in which someone (a lessee) pays the owner (or lessor) of a building, land, vehicle, or other asset for the use of that asset. The lease is the agreement between lessee and lessor.

Question

Ryan secured a lease on a machine by paying $1,350 as a down payment and then
$900 at the beginning of every month for 5 years. The lease rate was 4.50%
compounded monthly.
a. What was the principal amount of the lease?

b. What was the cost of the machine?
Round to the nearest cent
c. What was the amount of interest paid over the term of the lease?

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