Question

Henry is at the end of a three-year lease for his car. his leasing company says that his car is currently worth $12,780, a 72% residual value. determine the original msrp of henry’s leased car.

Answer 1

Original MSRP of Henry's leased car = $17750

Explanation:

Let's assume the original msrp of Henry’s leased car is x

Given : residual value is 72% of the original MSRP of Henry’s leased car

⇒ Residual value = 72% of x

Current worth of Henry's car = $12780

⇒ Residual Value = Current worth of the car

⇒ 72% of x = 12780

`\implies (72)/(100)* x=12780\\\\\implies 72* x=12780* 100\\\\\implies x = (12780* 100)/(72)\\\\\implies x = 17750`

Hence, Original MSRP of Henry's leased car = $17750

Answer 2

The residual value or some may term it the salvage value is the value of an item after a certain period of time. Let x be the original msrp (manufacturer suggested retail price), we can calculate for the salvage value as follows:
12,780 = 0.72x
The value of x from the equation generated above is 17,750. Therefore, the original msrp is equal to $17,750.