HP 10bII+ User Manual page 80

Table 6-12 Calculating the monthly lease payment
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Notice that even if the customer chooses not to buy the car, the lessor still includes a cash flow
coming in at the end of the lease equal to the residual value of the car. Whether the customer
buys the car or it is sold on the open market, the lessor expects to recover 7,500.
Example: Lease With Advance Payments
Your company, Quick-Kit Pole Barns, plans to lease a forklift for the warehouse. The lease is
written for a term of four years with monthly payments of 2,400. Payments are due at the
beginning of the month with the first and last payments due at the onset of the lease. You have
an option to buy the forklift for 15,000 at the end of the leasing period.
If the annual interest rate is 9%, what is the capitalized value of the lease?
72 Time Value of Money Calculations
Figure 15 Cash flow diagram (Calculate PV of the lease)
Display Description
12.00 Sets payments per year.
10.00 Stores desired annual yield.
- 1 3,500.00 Stores lease price.
7,500.00 Stores residual (buy out value).
36.00 Stores length of lease, in months.
253.99 Calculates the monthly lease
payment.