How to Compute the Present Value of Lease Payments With a Financial Calculator

Written by stephen lilley
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The present value of lease payments describes how much your lease (either on a home, car or other investment) is worth. This value takes into account a number of factors, including the size of each payment you make and how many payments you have remaining. You can calculate the present value of your lease payments in a few minutes with a financial equation and a calculator.

Skill level:
Easy

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Instructions

  1. 1

    Add 1 to the discount rate per month that you receive on your lease. This number will be in the lease agreement you signed when the lease began, and will be expressed as a decimal point. For example, if your discount rate is 0.08 per cent, 1 + 0.08 = 1.08. Take the number you get and press the "Exponent" key (typically the " ^ " key) on your financial calculator. Use the total number of remaining lease payments as your exponent. Write this number down. For example, if you have 10 payments remaining, 1.08 raised to the 10th power equals 2.16.

  2. 2

    Divide the number 1 by the number you got at the end of Step 1. For example, 1 divided by 2.16 equals 0.46. Write this number down.

  3. 3

    Subtract the number you got in Step 2 from the number 1. Type "1 - " into your calculator and enter the number you calculated at the end of Step 2. For example, 1 - 0.46 equals 0.54. Write this number down.

  4. 4

    Divide the number you got in Step 3 by the discount rate per month that you receive on your lease. For example, 0.54 divided by 0.08 equals 6.75. Write this number down.

  5. 5

    Multiply the current dollar amount of each lease payment you make by the number you got in Step 4. For example, if you pay £195 for each payment, 300 multiplied by 6.75 equals £1,316. The number you are left with is the present value, in dollars, of your lease payments.

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