Question

Jennifer is leasing a car from a local auto retailer. The terms of the lease include a 9% interest rate for 36 months with a residual value of 57%. The MSRP for the car Jennifer is leasing is $17,500. What will Jennifer’s monthly lease payment be?
a.
$93.84
b.
$99.75
c.
$209.03
d.
$312.06

Answer 1

First compute the residual: 0.57 × $17,500 = $9,975.

Depreciation portion (monthly) = (Cap cost − Residual) / Term = ($17,500 − $9,975) / 36 = $7,525 / 36 = $209.03.

Convert APR to money factor: 9% → 9/2400 = 0.00375.

Finance charge (monthly) = (Cap cost + Residual) × money factor = ($17,500 + $9,975) × 0.00375 = $27,475 × 0.00375 = $103.03.

Total monthly lease payment ≈ $209.03 + $103.03 = $312.06.

Answer: d. $312.06 (assuming cap cost = MSRP and no taxes/fees/down payment).