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Math Help - Calculating payments when there is a left over residual value??? help please :)

  1. #1
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    Calculating payments when there is a left over residual value??? help please :)

    The MSRP on a new Bose stereo system is $38,700. The interest rate on a 48-month lease is 1.9% compounded monthly. What is the monthly lease payment assuming a down payment of $5,350 and a residual value of $11,850?
    Round your final answer to 2 decimal places, do not include a $ sign or a comma.

    So this is what I'm doing, I'm subtracting the down payment from 38700.... to get 33350

    taking that at finding the future value of it: 33350 (1.001583333)^48 = 35981.23862

    Subtracting the residual value of 11850 to get 24131.23862

    Then finding the payments of an anuity using that as my future value... looking like this: 24131.23862((1.001583333)^48 -1 /.001583333) = 484.27 after rounding up..


    Apparently this is wrong though and i have no idea what I'm doing wrong. Any help would be greatly appreciated. thanks a lot!
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  2. #2
    MHF Contributor
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    Re: Calculating payments when there is a left over residual value??? help please :)

    484.27 is correct.
    Unless the 1.9% is monthly, meaning 22.8% annual cpd monthly;
    that would be monthly payment of $911.90
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