Question

You are thinking about leasing a car. The purchase price of the car is $ 35,000. The residual value​ (the amount you could pay to keep the car at the end of the​ lease) is $ 15,000 at the end of 36 months. Assume the first lease payment is due one month after you get the car. The interest rate implicit in the lease is 5.75 % ​APR, compounded monthly. What will be your lease payments for a 36​-month ​lease? ​(Note: Be careful not to round any intermediate steps less than six decimal​ places.) Your monthly lease payments will be ​$ nothing. ​(Round to the nearest​ cent.)

Your monthly lease payments will be ?

Answer 1

fao=0 Solution : - There are lease payment I Depureciation three main components of a Fee 2. Finance Fee 3. Taxes (which are NIL in the given question) 1. depreciation Fee: = (cost of cay - Residual value) number of installments 35000 - 15000 36 = 20000 36 -$555.55 2. Finance Fee! i (cost of cart Residual value) x money factor Here money factor = Rate 2400 २५०० = 0.0025

Here Рес- "2400" is the denominator after conversion of a percentage to deunals, yearly interest to monthly interest, and applying it to average principal amount outstanding during the lease. Finance Fee = ( 35000 +15000) x 0.0025 50 000 X 0.0025 = $125 Thus, the monthly lease payment adding the above two components would be = Depreciation Fee + Finance Fee = $ 555.55 + $125 = $680.55 Therefore, monthly fease payment will be [* 680.55]