PV( Lease Payments )= Purchase Price PV( Residual Value ) Lease Terms in a Perfect Market Problem Suppose the purchase price of the forklift is $20,000, its residual value in four years is certain to be $6000, and there is no risk that the lessee will default on the lease. If the risk-free interest rate is a 6% APR with monthly compounding, what would be the monthly lease payment for a four-year lease in a perfect capital market? Note that lease payments are ty the beginning of each payment .1 Leases Versus Loans (Example 25.2) - If the loan is fairly priced, the loan payments would be such that PV( Loan Payments )= Purchase Price Loan Payments in a Perfect Market Problem Suppose that you purchase the forklift for $20,000 by borrowing the purchase price using a fouryear annuity loan. What would the monthly loan payment be in a perfect capital market where the risk-free interest rate is a 6% APR with monthly compounding, assuming no risk of default? How does this compare with the lease payment of Example 25.1? Suppose the purchase price of the forklift is $20,000, its residual value in four years is certain to be $6000, and there is no risk that the lessee will default on the lease. If the risk-free interest rate is a 6% APR with monthly compounding, what would be the monthly lease payment for a four-year lease in a perfect capital market