Use the information for the question(s) below.
Suppose the purchase price of a bulldozer is $90,000, its residual value in four years is certain to be $15,000, and there is no risk that the lessee will default on the lease. Assume that capital markets are perfect and the risk-free interest rate is 6% APR with monthly compounding.
-The monthly lease payments for a four year lease of the Bulldozer are closest to ________.
A) $1,870
B) $1,825
C) $1,750
D) $2,115

Question

Quizplus · Accepted Answer

B) Set calculator to BEG mode (Annuity Due mode)
PV = 90,000
FV = −15,000
N = 48 (4 years × 12 months/year)
I = .5 (6%/12 months)
Compute PMT = $1827.24

Use the Information for the Question(s) Below