Effective interest paid - need formula/function
 

I would like to calculate the effective interest paid on a lease. If the
asset value is $55k, and the lease payments are $2,519 for 2 years with a
residual asset value of $1 at the end of the lease, what is the effective
interest rate? Note that the first payment is double ($5,038), with 22
monthly payments thereafter.

Effective interest paid - need formula/function
 

Since your payments are not equal, you will want to use the IRR
function. This would require you to list out all of the payments as
such:

55000
-5038
-2519
-2519
-2519
-2519
-2519
-2519
-2519
-2519
-2519
-2519
-2519
-2519
-2519
-2519
-2519
-2519
-2519
-2519
-2519
-2519
-2519
-2519
0
1

=IRR(above range)

The answer is 0.84% x 12 = 10%

Of course, I assumed you had the "free" month at the end....instead of
immediately after the double-month at the beginning.


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Lotus123
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