MATH SOLVE

10 months ago

Q:
# Jennifer is leasing a car from a local auto retailer. The terms of the lease include a 9% interest rate for 36 months with a residual value of 57%. The MSRP for the car Jennifer is leasing is $17,500. What will Jennifer’s monthly lease payment be? a. $93.84 b. $99.75 c. $209.03 d. $312.06

Accepted Solution

A:

1. The problem gives the residual value in percentage, and you need it in dollars. So, if the MSRP for the car Jennifer is leasing is $ 17,500, you have:

57%/100=0.57

residual value=$17,500*0.57= $9,975

2. Then, you need to substract the residual value and the lease term, to calculate the value of the car, as below:

car value=$17,500-$9,975=$7,525

3. You need to calculate the money factor, which is the interest rate divided by 2400. Then, you have:

Interest rate=9%/100=0.09

Money factor=0.09x2400

Money factor=0.00375

4. The interest is:

I=($17,500+$9,975)(0.00375)

I=$103.03

5. Therefore, the monthly payment is:

Monthly payment=(car value/36 months)+Interest

Monthly payment=($7,525/36)+$103.03

Monthly payment=$209.02+$103.03

Monthly payment=$312.06

What will Jennifer’s monthly lease payment be?

The answer is: d. $312.06

57%/100=0.57

residual value=$17,500*0.57= $9,975

2. Then, you need to substract the residual value and the lease term, to calculate the value of the car, as below:

car value=$17,500-$9,975=$7,525

3. You need to calculate the money factor, which is the interest rate divided by 2400. Then, you have:

Interest rate=9%/100=0.09

Money factor=0.09x2400

Money factor=0.00375

4. The interest is:

I=($17,500+$9,975)(0.00375)

I=$103.03

5. Therefore, the monthly payment is:

Monthly payment=(car value/36 months)+Interest

Monthly payment=($7,525/36)+$103.03

Monthly payment=$209.02+$103.03

Monthly payment=$312.06

What will Jennifer’s monthly lease payment be?

The answer is: d. $312.06