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  1. #1
    2 Star Lounger
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    Lease Calculation (Exel 2000 sr1)

    Hello. I've attached a SS with two lease proposals. I created an amortization table for each proposal and calculated the interest rate using Goal Seek.

    I then calculated the interest rate using the RATE function for each proposal. The results were identical for one proposal (which they should be), the for the other one there was 0.04756% difference in the rates. This difference is not acceptable considering the size of the lease, but I can't figure out the reason. My financial calculator agrees with the RATE function results in both proposals.

    Is there an error in my table? The rates should be closer than 0.04756% shouldn't they.

    Thanks for any help

  2. #2
    3 Star Lounger
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    Re: Lease Calculation (Exel 2000 sr1)

    You were actually calculating an amortization on a 59 month lease by treating the buyout as due at the start of month 60: in fact, you have already paid for the use of the asset for that month, and will only have to buy it at the end of the month. It made a very small difference on the "$1" buyout lease, because you were only talking about accelerating a payment of $1 - five years out, the difference is lost in the rounding. On the $32K payout, though, the difference was enough to affect your interest calculation.

    See the attached file for the revised example.

  3. #3
    2 Star Lounger
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    Re: Lease Calculation (Exel 2000 sr1)

    Thank you!

    Ken

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