Question

Calculate the monthly lease payment for a 36-month lease on a car with a $29,000 MSRP, a 79% residual value, and a money factor of 0.00365.

a.
$358.64
b.
$128.08
c.
$169.17
d.
$105.85

Answer 1

Option A

The monthly lease payment for a 36-month lease on a car is $ 358.64

Solution:

Given that,

MSRP of car = $29,000

Percentage of residual = 79% =
`(79)/(100) = 0.79`

Find residual value

`\text{Residual value } = \text{ MSRP } * \text{ Percentage of residual } \\\\\text{Residual value } = 29000 * 0.79 \\\\\text{Residual value } = 22910`

Find the depreciation amount

Depreciation amount = cost - residual value

Depreciation amount = 29000 - 22910 = 6090

Find Base monthly lease payment

`\text{Base monthly lease payment } = \frac{ \text{ Depreciation amount }}{ \text{ number of months }}`

`\text{ Base monthly lease payment } = (6090)/(36) = 169.1667`

Find Interest per month

`\text{ Interest per month } = (cost + residual ) * \text{ money factor }`

`\text{Interest per month } = (29000 + 22910) * 0.00365= 189.4715`

Find monthly lease payment

Monthly lease payment = Base monthly lease payment + Interest per month

Monthly lease payment = 169.1667 + 189.4715 = 358.6382
`\approx 358.64`

Thus monthly lease payment is $ 358.64

Option A is correct