# Finance Help

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

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