Henry is at the end of a three-year lease for his car. his leasing company says that his car is currently worth $12,780, a 72% residual value. determine the original msrp of henry's leased car.

Question

Ruben

Mathematics

21 May, 00:25

Henry is at the end of a three-year lease for his car. his leasing company says that his car is currently worth $12,780, a 72% residual value. determine the original msrp of henry's leased car.

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Emerson Mitchell · Answer 1

The residual value or some may term it the salvage value is the value of an item after a certain period of time. Let x be the original msrp (manufacturer suggested retail price), we can calculate for the salvage value as follows:

12,780 = 0.72x

The value of x from the equation generated above is 17,750. Therefore, the original msrp is equal to $17,750.