Section 14: Leasing 155
Example 1: A copier worth $22,000 is to be leased for 48 months. The lessee
has agreed to make 4 payments in advance, with a purchase option at the end of
48 months enabling him to buy the copier for 30% of the purchase price. What
monthly payment is necessary to yield the lessor 15% annually:
Example 2: Using the information from example 1, what would the monthly
payments be if the lessor desired a yield of 18% annually?
Solving For Yield
Solving for yield is essentially the same as solving for Internal Rate of Return
(IRR). The keystrokes are as follows:
1. Press fCLEARH.
2. Key in the amount of the first cash flow then press gJ. This initial
amount is the difference between the initial loan amount and any payments
received at closing time. Observe the sign convention: positive for cash
received and negative for cash paid out.
3. Key in the amount of the first cash flow then press gK. Then key in
the number of times that cash flow occurs then press ga.
Keystrokes (RPN mode) Display
48?0
15\
12z?1
1.25
Monthly interest rate.
22000?2
30b?3
4?4t
487.29
Monthly payment received by
lessor.
Keystrokes (RPN mode) Display
487.29
From previous example.
18\12z
1.50
Monthly interest rate.
?1t
520.81
Monthly payment received by
lessor.
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