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17 December, 21:53

You have just leased a car that has monthly payments of $335 for the next 4 years with the first payment due today. If the APR is 6.12 percent compounded monthly, what is the value of the payments today?

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  1. 18 December, 00:15
    0
    = $ 14,303.62

    Explanation:

    Total number of payments = 4 * 12 = 48

    The present value of the lease payment will be determined as follows:

    Step 1

    Determine the PV of last 47 payments. This is required because the first payment is already in present value term as it receivable immediately.

    PV = A * 1 - (1+r) ^ (-n)

    r - 6.12%/12 = 0.51%, A = 335

    PV = 335 * (1 - (1.0051) ^ (-47) / 0.0051)

    PV = 335 * 41.697

    PV = 13,968.62

    Step 2

    Present Value of Lease payments

    = PV of last 47 payments + $335

    = 13,968.62 + 335

    = $ 14,303.62

    The value of the payments today $ 14,303.62
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Home » Business » You have just leased a car that has monthly payments of $335 for the next 4 years with the first payment due today. If the APR is 6.12 percent compounded monthly, what is the value of the payments today?
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