Total payment:Payment $300.33 $5.07 $305.40Note that in this case the lease payment is probably not much different from what the pay-
ment would be to buy the computers outright and finance them at the same interest rate.
Nonetheless, as mentioned previously, the business may find leasing attractive for reasons
other than having a lower payment.EXERCISES 10.4
A. Calculating Lease Payments- Suppose you want to buy a new car, costing $21,575.
a. Suppose you borrow the full price of the car with a 5-year loan at 7¾%. Calculate your monthly car loan payment.
b. Suppose instead you lease the car for 2 years. The residual value is $17,453 and the leasing company uses a 7¾%
interest rate to determine the payment. Find the monthly lease payment. - Hugo is looking at a new truck costing $18,345. Calculate his monthly payment:
a. Assuming he buys the car, fi nancing the full price with a 5-year loan at 9%.
b. Assuming he leases the car for 3 years. Assume a $12,910 residual value and a 9% interest rate. - Vanessa is looking at leasing a new car for 2 years. The total cost is $24,075, the residual value would be $18,950, and
the interest rate is 7½%. Calculate her monthly lease payment:
a. Assuming she makes no down payment.
b. Assuming she makes a $3,500 down payment. - A car dealer runs an ad for 3-year leases on two different car models. The cost for a new Cascadia sedan is $31,953
and the 3-year residual value is $25,750. The cost for a new Kiriana sedan is $27,935 and the 3-year residual value
is $15,910. Calculate the lease payment for each of these vehicles, assuming an 8% interest rate. Is there anything
surprising about your results?
B. Mileage Limits- The lease on Kim’s SUV allows her 12,500 miles per year, with a 38 cents per mile penalty for overages. At the end of
her 3-year lease, she returns the vehicle with 39,552 miles on it. How much of a mileage penalty, if any, does she owe? - The 2-year lease on my car allows me 15,000 miles per year plus 42 cents per mile over this limit. If I return the car with
43,552 miles on it, how much of a mileage penalty, if any, do I owe? - Suppose you have a 2-year lease on a car that allows 14,000 miles per year. The overmileage penalty is 37.5 cents per
mile. In the fi rst year you put 11,864 miles on the car, and in the second year you put 15,661 miles on it. How much of
Copyright © 2008, The McGraw-Hill Companies, Inc.a mileage penalty, if any, will you owe?
Exercises 10.4 463