Homework Answers
| The following are the data in the given problem: | ||
| Lease Term | 36 months | |
| 1st 11 payments | 0 | |
| 12th payment | $68,742 | |
| Purchase Price | $19,00,000 | |
| Requirement: | ||
| Compute Annual Interest Rate in excel | ||
| Step 1 | ||
| Prepare the Interest rate table in Excel | ||
| Step 2 | ||
| Start of Lease | $19,00,000 | A1 |
| Month 1 | $0 | A2 |
| Month 2 | $0 | A3 |
| Month 3 | $0 | A4 |
| Month 4 | $0 | A5 |
| Month 5 | $0 | A6 |
| Month 6 | $0 | A7 |
| Month 7 | $0 | A8 |
| Month 8 | $0 | A9 |
| Month 9 | $0 | A10 |
| Month 10 | $0 | A11 |
| Month 11 | $0 | A12 |
| Month 12 | -$68,742.10 | A13 |
| Month 13 | -$68,742.10 | A14 |
| Month 14 | -$68,742.10 | A15 |
| Month 15 | -$68,742.10 | A16 |
| Month 16 | -$68,742.10 | A17 |
| Month 17 | -$68,742.10 | A18 |
| Month 18 | -$68,742.10 | A19 |
| Month 19 | -$68,742.10 | A20 |
| Month 20 | -$68,742.10 | A21 |
| Month 21 | -$68,742.10 | A22 |
| Month 22 | -$68,742.10 | A23 |
| Month 23 | -$68,742.10 | A24 |
| Month 24 | -$68,742.10 | A25 |
| Month 25 | -$68,742.10 | A26 |
| Month 26 | -$68,742.10 | A27 |
| Month 27 | -$68,742.10 | A28 |
| Month 28 | -$68,742.10 | A29 |
| Month 29 | -$68,742.10 | A30 |
| Month 30 | -$68,742.10 | A31 |
| Month 31 | -$68,742.10 | A32 |
| Month 32 | -$68,742.10 | A33 |
| Month 33 | -$68,742.10 | A34 |
| Month 34 | -$68,742.10 | A35 |
| Month 35 | -$68,742.10 | A36 |
| Month 36 | -$68,742.10 | A37 |
| Formula | (IRR(A1:A37)+1)^12-1 | |
| Annual Interest Rate | -4.87% | |
Answer: Annual Interest Rate is (4.87%).
Thank you!
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