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25 June, 19:43

You want to lease a set of golf clubs from pings ltd. The lease contract is in the form of 24 equal monthly payments at an apr of 11.2 percent, compounded monthly. Because the clubs cost $2,650 retail, pings wants the pv of the lease payments to equal $2,650. Suppose that your first payment is due immediately. What will your monthly lease payments be?

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  1. 25 June, 20:03
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    To calculate the lease payments we use the excel function PMT as in = PMT (rate, nper, pv, fv, type)

    Rate = 11.2% Compounded monthly

    Rate = 11.2%/12 (Monthly rate)

    NPER = 24 months = 24

    PV = 2650

    FV = 0

    TYPE = 1 (Since the payments are due immediately meaning this is an annuity due)

    So, monthly payment = PMT (11%/12,24,2650,0,1) = $122.39

    Your monthly lease payments should be = $122.39
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