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Determine the money factor for a lease with an interest rate of 9%

User Tillsten
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1 Answer

5 votes

Answer:

0.00375

Explanation:

The money factor for a lease is used to determine how much is charged monthly on a lease payment. If the money factor is low, the lease payment is low making it a good transaction but if the money factor is high, the lease payment is also high and this is not desirable. The money factor is given by:

Money factor = Interest rate / 2400

Given an interest rate of 9%, the money factor is calculated as:

Money factor = Interest rate / 2400 = 9% / 2400 = 0.00375