Table
KeysDisplay Description
JG\Í | 12.00 | Sets payments per year. |
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J:Ò | 10.00 | Stores desired annual yield. |
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JDV::yÏ | Stores lease price. | |
jV::É | 7,500.00 | Stores residual (buy out value). |
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DSÙ | 36.00 | Stores length of lease, in months. |
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Ì | 253.99 | Calculates the monthly lease |
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Notice that even if the customer chooses not to buy the car, the lessor still includes a cash flow coming in at the end of the lease equal to the residual value of the car. Whether the customer buys the car or it is sold on the open market, the lessor expects to recover 7,500.
Example: Lease With Advance Payments
Your company,
If the annual interest rate is 9%, what is the capitalized value of the lease?
Figure 15 Cash flow diagram (Calculate PV of the lease)
72 Time Value of Money Calculations