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Problem 5 - Lease Payments     
         
A company leases equipment for 7 years.     
The equipment costs $28,000 and the owner wants to earn 9.5% on the lease. 
What should be the required lease payments?    
         
Rate        
Nper        
PV        
FV        
Type        

PMT

 

 

          
A couple borrows $935,000 for 7 years for the purchase of a vacation home at an interest rate of 7%. 
The loan requires that the interest and principal be paid in equal, annual payments.   
The interest is determined on the declining balance that is owed.      
          
What are the required annual payments on the loan?      
          
Rate         
Nper         
PV         
FV         
Type         
PMT Yearly payment owed     
          
How much is the principal loan balance reduced by during the first year?    
Hint: To determine the principal paid in year 1, subtract the interest paid in year 1 from the total yearly payment.
          
Rate         
          
Principal loan value         
          
Interest paid in year 1         
          
Total payment made in year 1         
          

Principal paid the first year 

 

A father has decided to set aside a one time lump sum for college that will amount to $60,000 by the time  
his 5 year old is 18 years old (13 years). Using 8% as the rate and assuming no further investments will be made,
how much must the father invest today in order to have $60,000 in 13 years?     
             
Rate            
Nper            
PMT            
FV            
Type            
PV            

 

         
        
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