Question

A marketing manager leases a car for 24 months after agreeing to a negotiated price of $43,250 and makes a down payment that is 20% of the negotiated price. Find the monthly lease payment (in dollars) if the money factor is 0.0026. Assume that the residual value is 53% of the MSRP of $47,900 and there is no trade-in. (Round your answer to the nearest cent.)

Answer 1

The monthly lease payment is $9,397.08.

Step-by-step explanation:

To find the monthly lease payment, we need to calculate the capitalized cost, which is the negotiated price minus the down payment. The down payment is 20% of the negotiated price, so the down payment amount is $43,250 x 0.20 = $8,650. The capitalized cost is $43,250 - $8,650 = $34,600.

Next, we need to calculate the depreciation cost, which is the difference between the capitalized cost and the residual value. The residual value is 53% of the MSRP, so the residual value is $47,900 x 0.53 = $25,367. The depreciation cost is $34,600 - $25,367 = $9,233.

Finally, we need to calculate the finance cost, which is the money factor multiplied by the sum of the capitalized cost and the residual value. The finance cost is 0.0026 x ($34,600 + $25,367) = $164.08.

The monthly lease payment is the sum of the depreciation cost and the finance cost, so the monthly lease payment is $9,233 + $164.08 = $9,397.08.