48
BA II PLUS™ Calculator
Present Value of Lease with Residual Value
The Peach Bright Company wants to purchase a machine that it
is currently leasing from your company. You offer to sell it for
the present value of the lease discounted at an annual interest
rate of 22% compounded monthly. The machine has a residual
value of $6500, and 46 monthly payments of $1200 remain on
the lease. If the payments are due at the beginning of each
month, how much should you charge for the machine?
The total value of the machine is the present value of the
residual value plus the present value of the lease payments.
Procedure
Keystrokes
Display
Set all variables to defaults.
&
}
!
RST
0.00
Set payments per year to 1.
&
[
1
!
P/Y=
1.00
Set beginning-of-period
payments.
&
]
&
V
BGN
Return to calculator mode.
&
U
0.00
Enter number of payments.
46
,
N=
46.00
Calculate and enter periodic
interest rate.
22
6
12
N
-
I/Y=
1.83
Enter residual value of asset.
6500
S
0
FV=
-6,500.00
Compute present value of
residual.
%
.
PV=
2,818.22
Enter amount of lease
payment.
1200
S
/
PMT=
-1,200.00
Compute present value of
lease payments.
%
.
PV=
40,573.18
Peach Bright should pay your company $40,573.18 for the
machine.
