1. Dave needs a new computer for university. The purchase price is
$3294.00 before tax with a $0 down payment. Financing is available
at 18.99%, compounded monthly. GST is 5% and PST is 7%.
Calculate the monthly payment to purchase this computer over
48 months. What is the total amount paid for the computer?
What are the monthly payments and total paid if the computer is
financed for 36 months? HOMEWORK
What about 24 months?
N=48 N=36 N=24
I%=18.99 I%=18.99 I%=18.99
PV=3689.28 PV=3689.28 PV=3689.28
PMT=­110.29 PMT=­135.22 PMT=­185.95
FV=0 FV=0 FV=0
P/Y=12 P/Y=12 P/Y=12
C/Y=12 C/Y=12 C/Y=12
PMT: END BEGIN PMT: END BEGIN PMT: END BEGIN

2. Daniel needs a new computer for university. The purchase price is
$3294.00 before tax with a $0 down payment. Daniel could choose to
lease the computer. All lease rates include taxes.
A 48 month lease costs $106.92/month. What is the total amount
of the lease?
Find the total cost of the lease if the computer is leased for 36
months at $132.32/month.
What about a 24 month lease that costs $182.88/month?

3. Leasing ...
When you lease an item such as a car or computer, you are renting an
item owned by the lessor. You, the lessee, must make monthly
payments to pay for:
• the depreciation of the item

4. Leasing ...
When you lease an item such as a car or computer, you are renting an
item owned by the lessor. You, the lessee, must make monthly
payments to pay for:
• the depreciation of the item
• the sales taxes on the amount of depreciation

5. Leasing ...
When you lease an item such as a car or computer, you are renting an
item owned by the lessor. You, the lessee, must make monthly
payments to pay for:
• the depreciation of the item
• the sales taxes on the amount of depreciation
• the interest on the unpaid value of the item

6. Leasing ...
When you lease an item such as a car or computer, you are renting an
item owned by the lessor. You, the lessee, must make monthly
payments to pay for:
• the depreciation of the item
• the sales taxes on the amount of depreciation
• the interest on the unpaid value of the item
At the end of the lease, you either return the item to the lessor or
buy it for the residual value (i.e., the estimate of the item's
worth at lease end as determined by the lessor at the beginning
of the lease).

7. A $10000 car depreciates 20% per year. What is it worth in 5 years?

8. Leasing continued ...
When you lease a vehicle, you need to sign a lease agreement. This
agreement specifies:

9. Leasing continued ...
When you lease a vehicle, you need to sign a lease agreement. This
agreement specifies:
• the initial value of the item

10. Leasing continued ...
When you lease a vehicle, you need to sign a lease agreement. This
agreement specifies:
• the initial value of the item
• the buy out price at the end of the lease (the residual value)

11. Leasing continued ...
When you lease a vehicle, you need to sign a lease agreement. This
agreement specifies:
• the initial value of the item
• the buy out price at the end of the lease (the residual value)
• the down payment (if there is one)

12. Leasing continued ...
When you lease a vehicle, you need to sign a lease agreement. This
agreement specifies:
• the initial value of the item
• the buy out price at the end of the lease (the residual value)
• the down payment (if there is one)
• any additional fees

13. Leasing continued ...
When you lease a vehicle, you need to sign a lease agreement. This
agreement specifies:
• the initial value of the item
• the buy out price at the end of the lease (the residual value)
• the down payment (if there is one)
• any additional fees
• the interest rate

14. Leasing continued ...
When you lease a vehicle, you need to sign a lease agreement. This
agreement specifies:
• the initial value of the item
• the buy out price at the end of the lease (the residual value)
• the down payment (if there is one)
• any additional fees
• the interest rate
• the monthly payment.

15. Leasing continued ...
When you lease a vehicle, you need to sign a lease agreement. This
agreement specifies:
• the initial value of the item
• the buy out price at the end of the lease (the residual value)
• the down payment (if there is one)
• any additional fees
• the interest rate
• the monthly payment.
The lease agreement will also specify other terms or restrictions,
such as what is reasonable use and care of the item. For
example, a car lease will specify how many kilometres you can
drive, and the fee per kilometre if you exceed this limit.

17. Page 178
Questions 1 ­ 7