Required:
Find out the total amount of installments and interest respectively associated with this lease agreement.
Solution:
Fair Value = 100,000
Down Payment= 20,000
Interest Rate = 9.5% P.A
Installments = 6 half yearly
Outstanding Principal is 80,000 because 20,000 is down payment which is less in fair value. Last installment is 15634 because in the given scenario written The last payment is to be made in full along with the interest charges due.
Find out the total amount of installments and interest respectively associated with this lease agreement.
Solution:
Fair Value = 100,000
Down Payment= 20,000
Interest Rate = 9.5% P.A
Installments = 6 half yearly
| No. of Installments | Lease Rental | Financial Charges | Principal | Principal Outstanding |
| 80,000 | ||||
| 1 | 15,636 | 3,800 | 11,836 | 68,164 |
| 2 | 15,636 | 3,238 | 12,398 | 55,766 |
| 3 | 15,636 | 2,649 | 12,987 | 42,779 |
| 4 | 15,636 | 2,032 | 13,604 | 29,175 |
| 5 | 15,636 | 1,386 | 14,250 | 14,925 |
| 6 | 15,634 | 709 | 14,925 | 0 |
| Total | 93,814 | 13,814 | 80,000 |
Outstanding Principal is 80,000 because 20,000 is down payment which is less in fair value. Last installment is 15634 because in the given scenario written The last payment is to be made in full along with the interest charges due.
