Question 1116005: The MSRP on a Nissan Maxima 3.5 SV is $40,325. The interest rate on a 24-month lease is 1.9% compounded monthly. What is the monthly lease payment, assuming a down payment of $7100 and a residual value of $13,690?
Answer by Theo(13342)   (Show Source):
You can put this solution on YOUR website! i believe this is the way it's done, not counting taxes and additional lease fees.
you lease a car with an msrp of 40,325.
since you have not negotiated the price of the car down to something lower than that, the lease is based on that amount.
you put 7100 down.
the amount of money that is still owe on the car is 40,325 - 7100 = 33,225.
the residual value of the at the end of the lease term is 13,690.
you are responsible to pay the difference.
subtract 13,690 from 33,225 and the amount of money that has to be paid on the lease is 19,535.
at an APR of 1.9% per year, this is payed in monthly installments of 830.1656219.
that's your monthly lease payment.
rounded to the nearest cent, it becomes 830.17.
i checked online and came up with a website that give you a rough idea of what your lease payments will be.
that website is at https://www.carpaymentcalculator.net/calcs/auto-lease.php
that came up with a monthly payment of 851.10
that was composed of a depreciation fee of $813.96 per month, and a lease fee of $37.14 per month.
i was able to determine that the depreciation fee was $33,225.00 minus $13,690.00 = 19535 / 24 = 813.96 per month.
i was not able to determine how the monthly lease fee of $37.14 was calculated.
i can only assume that there was something in there other than interest charges, since the total of $851.10 per month was higher than the $830.17 that i calculated using a financial time value of money calculator.
from a strict mathematical standpoint, based on what you were given, i would go with the $830 figure.
if you were actually leasing a car, the actual monthly amount you would pay would probably be closer to the $851 figure plus additional charges for taxes and whatever else they include.
here's a picture of what my inputs were to that car lease calculator.
here's a picture of how i calculated the lease payments based on the following online time value of money calculator.
my inputs were:
present value = 403325 - 7100 = 33225 - 13690 = 19535.
future value = 0.
interest rate per time period = 1.9/12 = .15833333333.
number of time periods = 2 * 12 = 24
payment made at end of each time period.
the result is a monthly payment of $830.17.
if the payment was made at the beginning of each time period, the monthly payment would have been $828.85.
the actual way that lease companies charge if not necessarily the way the mathematical computations are done.
you need to check with your instructor as to how he expects the lease payments to be calculated.
mathematically, if end of month lease payment, then 830..., and if beginning of month payments, then 828....
here's pictures of both calculations using the online financial time value of money calculator.
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