Question

Ralph is leasing a $32,000 car for 36 months. The terms of his lease include an 8. 5% interest rate (money factor of 0. 00354) and a residual value of 72%. Determine Ralph’s approximate monthly lease payment. A. $145. 00 b. $230. 40 c. $248. 89 d. $443. 73.

Answer 1

Based on the information given in the question the approximate value of monthly lease payment is 443.73, which relph paid.

Given that, in $

Principal value =32000    

$\begin{aligned}\text{Residual Value}&=\text{Principal}\times\text{ Residual Percentage}\\&= \ 32,000\times 72\%\\&=\ 23040.\end{aligned}$

$\begin{aligned}\text{Depreciation}&=\text{Principal}-\text{ Residual value}\\&=32,000-23040\\&=8960\end{aligned}$

$\begin{aligned}\text{Base monthly lease payment}&=\frac{Depreciation}{ Residual value}\\&=\frac{8960}{36}\\&=248.89\end{aligned}$

$\begin{aligned}\text{Interest per month}&=\text{Principal amount}+{ Residual value}\times{money factor}\\&=\text{8960}+{23040}\times{0.00354}\\&=194.84\end{aligned}$

$\begin{aligned}\text{Monthly lease payment}&=\text{Base monthly lease payment}+{Interest per month}\\&=\text{248.89}+{194.84}\\&=443.73\end{aligned}$

                                     

Hence, the monthly lease payment is approximately $ 443.73

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