Question

Determine the monthly payment for a 36 month lease on a $26,000 car with a residual of 71% and an interest rate of 7. 5%. A. $104. 87 b. $209. 44 c. $273. 08 d. $348. 38.

Answer 1

Answer:

B. dollars

Explanation:

Answer 2

The lease fee is equal to the monthly rent, which is formally dictated underneath an agreement between two parties, granting one party the lawful liberty to utilize the other person's real estate belongings and other fixed assets, for a limited period.

The approximate monthly lease payment is $348. 38.

How to calculate the monthly payment?

Given,

• Residual percentage = 71 %
• Interest rate = 7.5 %
• Lease amount for the car = $26,000
• Number of months = 36

First calculate the residual value as:

Residual value = 71 % of the lease amount ($26,000)

$\begin{aligned}&= 0.71 \times 26,000\\\\&= \ 18,460\end{aligned}$

Calculate the money factor as:

$\begin{aligned}\rm Money\; factor &= \dfrac{7.5 }{2400}\\\\&= 0.003125\end{aligned}$

• Step 1: Calculate the monthly depreciation as:

$\begin{aligned}\rm Monthly depreciation &= \dfrac{\text{Lease amount - residual amount }}{\text{Number of months}}\\\\&=\dfrac{ 26000 - 18460}{36}\\\\&= \ 209.44\end{aligned}$

• Step 2: Calculate the monthly financial charge as:

$\begin{aligned} \text{Monthly Financial Charge} &= (\text{Lease amount + Residual value}) \times \text{Money factor}\\\\&= (26000 + 18460) \times 0.003125\\\\&= \ 138.94 \end{aligned}$

• Step 3: Calculate the lease amount  as:

$\begin{aligned}\text{Monthly Lease Amount} &= \text{Monthly Depreciation + Financial Charge}\\\\&= 209.44 + 138.94\\\\&= \ 348.38\end{aligned}$

Therefore, option d. $348. 38 is correct.

Learn more about the lease amount here:

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