quote:Originally posted by SalesServiceGuy:
What is the detailed calculation to figure out the actual interest rate on a lease rate?
Take for example, a 60 month FMV term, 5% Residual with a rate factor of $20.92 monthly. $2,501- $5,000 value.
Thanks,
Financial calculator (HP12c)
60 [n]
1000 [pv]
50 [-][fv]
20.92 [-][pmt]
[i] is monthly, 12 [x] is annual
The formula is
PV = FV(1 + i)-n + PMT 1 - (1 + i)-n
i
You can flip the formula around to solve for i, but financial calculator is faster.
In your example, i is .8853 per month or 10.62 annual.
Probably didn't format well, go to "Present Value of an Annuity" here http://people.hofstra.edu/stef...World/Summary10.html