6.) You receive a $35,000 car Lease at 6% nominal annual for 60 months. Interest
ID: 2729286 • Letter: 6
Question
6.) You receive a $35,000 car Lease at 6% nominal annual for 60 months. Interest is compounded daily and you make monthly payments. Your residual value at the end of your lease is 15,000. Assume lease payments are made at the beginning of the month, and loan payments are made at the end of the month. Answer: What is your monthly payment? If you can invest your money at 12% annual compounded monthly, would you prefer leasing or purshasing this vehicle?
*Note 1: I am specifically confused on how you account the fact that lease payments are made in the beginning of the month, (I mention my answer for #5 with loan payments in note 2) and what you need to look for to make the comparison in the second part of the question?
*Note 2: Question five looks at paying for the loan by loans. Solving for that I had gotten monthly rate to be .5% and monthly payment $677.03. What does it want for part C with the principle?
Explanation / Answer
Solution.
Question 5.
Calculation of interest and monthly payment.
Interest rate 6% annual 6.18 % effective if compounded daily.
Beginning Balance Scheduled Payment Total Payment Principal Interest Ending Balance 35000.00 679.58 679.58 499.33 180.25 34500.67 34500.67 679.58 679.58 501.90 177.68 33998.77 33998.77 679.58 679.58 504.49 175.09 33494.28 33494.28 679.58 679.58 507.09 172.50 32987.19 32987.19 679.58 679.58 509.70 169.88 32477.49 32477.49 679.58 679.58 512.32 167.26 31965.17 31965.17 679.58 679.58 514.96 164.62 31450.21 31450.21 679.58 679.58 517.61 161.97 30932.60 30932.60 679.58 679.58 520.28 159.30 30412.32 30412.32 679.58 679.58 522.96 156.62 29889.36 29889.36 679.58 679.58 525.65 153.93 29363.71 29363.71 679.58 679.58 528.36 151.22 28835.35 28835.35 679.58 679.58 531.08 148.50 28304.27 28304.27 679.58 679.58 533.81 145.77 27770.46 27770.46 679.58 679.58 536.56 143.02 27233.90 27233.90 679.58 679.58 539.33 140.25 26694.57 26694.57 679.58 679.58 542.10 137.48 26152.47 26152.47 679.58 679.58 544.90 134.69 25607.57 25607.57 679.58 679.58 547.70 131.88 25059.87 25059.87 679.58 679.58 550.52 129.06 24509.34 24509.34 679.58 679.58 553.36 126.22 23955.99 23955.99 679.58 679.58 556.21 123.37 23399.78 23399.78 679.58 679.58 559.07 120.51 22840.71 22840.71 679.58 679.58 561.95 117.63 22278.75 22278.75 679.58 679.58 564.85 114.74 21713.91 21713.91 679.58 679.58 567.75 111.83 21146.15 21146.15 679.58 679.58 570.68 108.90 20575.47 20575.47 679.58 679.58 573.62 105.96 20001.86 20001.86 679.58 679.58 576.57 103.01 19425.28 19425.28 679.58 679.58 579.54 100.04 18845.74 18845.74 679.58 679.58 582.53 97.06 18263.22 18263.22 679.58 679.58 585.53 94.06 17677.69 17677.69 679.58 679.58 588.54 91.04 17089.15 17089.15 679.58 679.58 591.57 88.01 16497.58 16497.58 679.58 679.58 594.62 84.96 15902.96 15902.96 679.58 679.58 597.68 81.90 15305.28 15305.28 679.58 679.58 600.76 78.82 14704.52 14704.52 679.58 679.58 603.85 75.73 14100.67 14100.67 679.58 679.58 606.96 72.62 13493.70 13493.70 679.58 679.58 610.09 69.49 12883.61 12883.61 679.58 679.58 613.23 66.35 12270.38 12270.38 679.58 679.58 616.39 63.19 11654.00 11654.00 679.58 679.58 619.56 60.02 11034.43 11034.43 679.58 679.58 622.75 56.83 10411.68 10411.68 679.58 679.58 625.96 53.62 9785.72 9785.72 679.58 679.58 629.18 50.40 9156.53 9156.53 679.58 679.58 632.43 47.16 8524.11 8524.11 679.58 679.58 635.68 43.90 7888.42 7888.42 679.58 679.58 638.96 40.63 7249.47 7249.47 679.58 679.58 642.25 37.33 6607.22 6607.22 679.58 679.58 645.55 34.03 5961.67 5961.67 679.58 679.58 648.88 30.70 5312.79 5312.79 679.58 679.58 652.22 27.36 4660.57 4660.57 679.58 679.58 655.58 24.00 4004.99 4004.99 679.58 679.58 658.96 20.63 3346.03 3346.03 679.58 679.58 662.35 17.23 2683.68 2683.68 679.58 679.58 665.76 13.82 2017.92 2017.92 679.58 679.58 669.19 10.39 1348.73 1348.73 679.58 679.58 672.64 6.95 676.10 676.10 679.58 676.10 672.62 3.48 0.00Related Questions
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