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You are looking to lease a car and the dealer offers you: Car price = $30,000 Monthly payments = $499 Down payment = $2,000

 

You are looking to lease a car and the dealer offers you: Car price = $30,000 Monthly payments = $499 Down payment = $2,000 Lease term = 48 months Purchase price at end of lease = $12,000 What is the implicit interest rate on the lease? 1 2 3 Cash flows: 4 Start 5 Month 1 Month 2 Month 3 Month 4 Month 5 10 Month 6 11 Month 7 12 Month 8 13 Month 9 14 Month 10 15 16 17 Month 13 18 Month 14 19 Month 15 20 Month 16 21 Month 17 22 Month 18 23 Month 19 24 Month 20 25 Month 211 26 Month 22 27 Month 23 28 Month 24 29 Month 25 30 Month 26 31 Month 27 32 Month 28 33 Month 29 34 Month 30 35 Month 31 36 Month 32 37 Month 33 38 Month 34 39 Month 35 40 Month 36 6 7 8 9 Implicit lease rate Month 11 Month 12 A 41 Month 37 42 Month 38 43 Month 39 44 Month 401 45 Month 41 46 Month 42 47 Month 43 48 Month 44 49 Month 45 50 Month 461 51 Month 47 52 Month 48 B Lease

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