Question

You would like to lease a car worth $36,601 for a three-year period. The leasing company told you that after three years, the car would have a residual value of $15,818. How much of the car’s original value will you have to pay off during your three-year lease?

Answer 1

$20,783

Explanation:

The original value of the car is given as $36,601.

Now, the residual value of the car after a 3 - year lease is given as $15,818.

Residual value is the amount that the person leasing this car can purchase it after the 3 years lease is expired.

Formula for his residual value is usually;

Residual value = original value - depreciation value

Where depreciation value is the amount of the cars original value the Person getting the vehicle on lease for 3 years would pay to cover that period.

Thus;

Depreciation value = 36601 - 15818 = $20783