Present Value of Future Minimum Lease Payments Formula

Use the below present value of future minimum lease payments formula to calculate the PV of future minimum lease payments for the given interest rate and the residual value with ease. The minimum lease payments are the amount the lessee is expected to pay over the term of the particular lease. The term of the lease and the amount of to be paid on each monthly payment is used to determine the total amount that the company or firm will pay during the lease period.

Formula:

PV = SUM[P / (1 + r)n] + [RV / (1 + r)n]


Where,

PV = Present Value
P = Annual Lease Payments
r = Interest Rate
n = Number of Years in the Lease Term
RV = Residual Value
SUM[P/(1+r)n] = The total amount paid over the lease term, discounted for the interest rate.

Related Calculator:

The residual value of a leased item is the value or worth of the item still remaining at the end of the lease. Use the above present value of future minimum lease payments formula to calculate the lease payments with simple steps.


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