Question

ennifer 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

Residual = 57% of $17,500 = 0.57 × 17,500 = $9,975.

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

Money factor ≈ APR / 2400 = 9 / 2400 = 0.00375.
Monthly finance (rent) charge = (Capital cost + Residual) × money factor = (17,500 + 9,975) × 0.00375 = 27,475 × 0.00375 = $103.03.

Total monthly payment = 209.03 + 103.03 = $312.06.

Answer: d. $312.06