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Section 14
Leasing
Advance Payments
Situations may exist where payments are made in advance (leasing is a good
example). These agreements call for extra payments to be made when the
transaction is closed.
This first procedure finds the periodic payment amount necessary to achieve a
desired yield when a number of payments are made in advance. And, given the
periodic payment, the second procedure calculates the periodic yield.
Solving For Payment
To calculate the payment, information is entered as follows:
1. Press g and fCLEARG.
2. Key in the total number of payments in the lease then press \.
3. Key in the total number of payments made in advance then press ?0-
n.
4. Key in or calculate the periodic interest rate as a percentage then press ¼.
5. Press 1ÞP$:0+.
6. Key in the initial loan amount then press ~z, to obtain the periodic
payment to be received by the lessor.
Example 1: Equipment worth $750 is leased for 12 months. The equipment is
assumed to have no salvage value at the end of the lease. The lessee has agreed
to make three payments at the time of closing. What monthly payment is
necessary to yield the lessor 10% annually?
Keystrokes (RPN mode) Display
gÂ
fCLEARG
12\
12.00
Duration of lease.
3?0-n
9.00
Number of periodic payments.
10gC
0.83
1ÞP
–1.00
$:0+
11.64
750~z
64.45
Monthly payment to be received.
