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

$348.38 so the answer is  d.

Answer 2

The correct answer is D. $348.38

Explanation:

Number of months = 36

Lease amount = $26000

Residual value = 71%

= 0.71 × 26000

= $18460

Interest Rate = 7.5%

`\text{Money factor = }(7.5)/(2400)=0.003125`

Step 1 : To calculate monthly depreciation by using the formula :

`\text{Monthly Depreciation = }\frac{\text{Lease amount - Residual Value}}{\text{Number of months}}\\\\ \text{Monthly Depreciation = }(26000-18460)/(36)=\$209.44`

Step 2 : To calculate monthly financial charge by using the formula :

Monthly Financial Charge = (Lease amount + Residual value) × Money factor

= (26000 + 18460) × 0.003125

= $138.94

Step 3 : To calculate lease amount by using the formula :

Monthly Lease Amount = Monthly Depreciation + Financial Charge

= 209.44 + 138.94

= $348.38

Hence, The correct answer is D. $348.38