Present Value of Future Minimum Lease Payments Calculator

Use our online present value of future minimum lease payments calculator to find the PV of future minimum lease payments. Some equipment's are taken for lease, since the company cannot afford or not necessary to buy. The minimum amount the lessee is expected to pay over the lease term is determined as the minimum lease payment, and since the value of lease (money) decreases over time, the measure of present value of the lease is called the Present Value (PV) of minimum lease payments.

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Use our online present value of future minimum lease payments calculator to find the PV of future minimum lease payments. Some equipment's are taken for lease, since the company cannot afford or not necessary to buy. The minimum amount the lessee is expected to pay over the lease term is determined as the minimum lease payment, and since the value of lease (money) decreases over time, the measure of present value of the lease is called the Present Value (PV) of minimum lease payments.

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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.

Example:

Calculate the pv of future minimum lease payments based on the annual lease payments of Rs. 50000, interest rate of 5%, number of years in the lease term of 3 years, and residual value of Rs. 45000.

Solution:

PV = SUM[50000 / (1 + 5)3] + [45000 / (1 + 5)3]
= 175035.09

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