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You are thinking about leasing a car, and the dealer offers you the following deal: You...

You are thinking about leasing a car, and the dealer offers you the following deal: You can drive the $23,000 car off the lot today, with no upfront payment if you agree to make monthly payments of $375.22 for five years.   At the end of the lease, you can keep the car if you pay out a residual value price of $4,000.  What is the annual rate of interest embedded in this lease arrangement?

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Answer #1
Calculator
Inputs:
PV              23,000.000
PMT                       (375.2)
FV                   4,000.00
N                              60
Output:
I/Y = IRR -0.8752%
Yield to maturity -10.50%

Answer is 10.50%

please rate.

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