Payment Of A Regular Lease With A Residual Value (BA II Plus, HB 10bII+)

The video demonstrates how to use a financial calculator to calculate the payment of a simple lease with a residual value.

Hi this is eddie and today we are going to work with leases with a residual value simply put a residual value is a value of say least equipment or least buildings given at the end of the lease and we’re going to find that is fairly easy to calculate payment of a lease when we’re dealing with leases with a residual value this is your simple normal lease using

Calculators with time value of money module we’re gonna enter the lease amount into the pv or present value register the number of payments into the n register the annual interest rate into the i / yr register or if you are working with the calculator with periodic interest rate register such as the here at packard hp 12c you’re going to use the periodic interest

Rate instead of the annual interest rate and the kicker here is you’re going to enter the residual value as the future value or into the fv register as a negative number i’m going to show you two examples of how this works first with the texas instruments be a to plus calculator and then one example with the hewitt packard 10 b2 plus calculator our first example is

To calculate the payment of a lease of equipment which at the time of the lease the value is $50,000 at the end of five years or 60 monthly payments the residual value is said to be $10,000 and the lease is going to be financed at 8% so let’s determine the monthly payment of alysse this is a straightforward lease no payments in vents no payments at the beginning of

Each period no odd periods this is just straightforward so we’re gonna add $50,000 or stir fifty thousand rather into present value sixty and in the annual rate is 8 percent 8i /y and the residual value we’re going to enter as a negative number ten thousand and put this into the future value register before i calculate payment i want to check the p /y or payments

Per year register and i’m going to do that right now and we want to make sure that’s 12 because we are dealing with monthly payments compute payment and it turns out that our monthly payment is going to be eight hundred and seventy seven dollars in 72 cents that’s going to be required payment for 60 months at 8 percent taking the value of equipment from 50 thousand

To ten thousand our second example say we’re going to lease a luxury car valued at $20,000 and the lease is going to go on for 48 monthly payments at ten and a half percent the residual value of the car is going to be five thousand dollars i’m using an hp 10 b2 calculator here to demonstrate this problem again straightforward i want to answer 20,000 in to present

Value 48 into n number of payments rates going to be 10.5% and we’re going to enter $5,000 as a residual value negative into future value and i want to make sure we are dealing with monthly payments so i’m going to enter 12 orange shift payment key and that stores 12 into the payments per year and we’re going to calculate the payment and it turns out that the

Payment per month is going to be four hundred twenty seven dollars and eighty cents this is how you deal with normal straightforward leases without any special terms i hope you find this video helpful thank you

Transcribed from video
Payment Of A Regular Lease With A Residual Value (BA II Plus, HB 10bII+) By ews773