Question

Elijah decides to lease a $20,000 vehicle for two years. It is estimated that the car will be resold in two years at a price

of $12,841, The Interest being charged is 41%. What is the financing foo?

$12.23

$43.87

$56.10

$68.33

Answer 1

$43.87

Explanation:

Elijah has decided to lease her car for years. She will be earning lease rental on the car along with interest. The interest charges on the lease rentals is amortized at the lease interest rate. The lease interest rate for the vehicle is decided to be 41%.

Year 1 : $20,000 * 41% * 0.045 * .025 = $18.20

Year 2 : ($20,000 - $18.20) * 41% * 0.045 * 0.25 = $25.67

The sum of year 1 and year 2 is $43.87.