Problem 5 - Lease Payments A company leases equipment for 7 years. The equipment costs $28,000 and the owner wants to earn 9.5% on the lease. What should be the required lease payments? Rate Nper PV FV Type PMT A couple borrows $935,000 for 7 years for the purchase of a vacation home at an interest rate of 7%. The loan requires that the interest and principal be paid in equal, annual payments. The interest is determined on the declining balance that is owed. What are the required annual payments on the loan? Rate Nper PV FV Type PMT Yearly payment owed How much is the principal loan balance reduced by during the first year? Hint: To determine the principal paid in year 1, subtract the interest paid in year 1 from the total yearly payment. Rate Principal loan value Interest paid in year 1 Total payment made in year 1 Principal paid the first year A father has decided to set aside a one time lump sum for college that will amount to $60,000 by the time his 5 year old is 18 years old (13 years). Using 8% as the rate and assuming no further investments will be made, how much must the father invest today in order to have $60,000 in 13 years? Rate Nper PMT FV Type PV .

1. Problem 5 - Lease Payments
A company leases equipment for 7 years.
The equipment costs $28,000 and the owner wants to earn 9.5%
on the lease.
What should be the required lease payments?

2. Rate
Nper
PV
FV

3. Type
PMT
A couple borrows $935,000 for 7 years for the purchase of a

4. vacation home at an interest rate of 7%.
The loan requires that the interest and principal be paid in
equal, annual payments.
The interest is determined on the declining balance that is owed.
What are the required annual payments on the loan?

5. Rate
Nper
PV
FV

6. Type
PMT
Yearly payment owed

7. How much is the principal loan balance reduced by during the
first year?
Hint: To determine the principal paid in year 1, subtract the
interest paid in year 1 from the total yearly payment.
Rate

8. Principal loan value
Interest paid in year 1

9. Total payment made in year 1
Principal paid the first year
A father has decided to set aside a one time lump sum for

10. college that will amount to $60,000 by the time
his 5 year old is 18 years old (13 years). Using 8% as the rate
and assuming no further investments will be made,
how much must the father invest today in order to have $60,000
in 13 years?
Rate

11. Nper
PMT
FV

12. Type
PV