How Do You Calculate APR On Equipment Lease?
Because of the fast depreciation of office equipment like computers, copiers and other technology, many companies lease their equipment instead of buying it. A lease requires monthly payments with the intention to purchase the equipment at a discounted price after finishing the terms of the lease or to start a new lease on another piece of equipment. Depending on your monthly payments as determined by your APR–your annual percentage rate, or yearly interest–, you can find yourself a decent deal on a piece of equipment that would otherwise be outside of your business budget. Determine the present value of the equipment; that is, the market value for the equipment to be bought. Determine the residual value. This is the discount/leftover price of the equipment at the end of the leasing contract. For instance, if you lease a $2,000 copy machine at 24 monthly payments, where at the end of the lease you can buy it for $500, then $2,000 is the present value and $500 is the residual value. D
