Videos: 5 fingers of finance

5 Fingers of Finance: PV and FV both not 0!

1. You decide to lease a new BMW automobile.  The vehicle costs $30,000 new and you are required to pay all taxes at the beginning of the lease.  The lease payments are $600 per month for three years and you know the lease company charges interest at 6% compounded monthly.

a) What is the residual value of the car after three years?

b) How much interest do you pay over the life of the lease?

2. You are saving for your son’s postsecondary education in 10 years.  You have $27,000 in an RESP account and plan to add $1,000 at the end of the year for the next ten years.  How much money will your son have when he goes to school in 10 years if you receive a return of 4.8% compounded annually on the investments?