Question
Anna secured a lease on a machine by paying $1,300 as a down payment and then $650 at the beginning of every month...
Anna secured a lease on a machine by paying $1,300 as a down payment and then $650 at the beginning of every month for 6 years. The lease rate was 3.25% compounded monthly. a. What was the principal amount of the lease? $0.00 Round to the nearest cent b. What was the cost of the machine? $0.00 Round to the nearest cent c. What was the amount of interest paid over the term of the lease? Round to the nearest cent
Answers
Down payment = Monthly payment = $650 $1,300 = 72 Months Term 6 Years * 12 Interest rate 3.25% * 1/12 0.2708333% Per month Monthly payment * [ 1 - ( 1 + I )^-n ] / I = $650 * [1 -(1 +0.2708333% -72 ] / 0.2708333% = S650 * [1 -0.823051575 ]/0.002708333 a) Principal amount of lease $650 65.33480311 $42,467.62202 (Rounded) $42,468 b) Cost of the Machine = Down payment + Principal amount of lease - $1,300 $42,468 = S43,768 c) Interest paid over the term of the lease = Total amount paid through monthly payments - Principal amount of lease = $650 Per month* 72 Months - $42.468 = $46,800 - $42,468 = $4,332
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