1. What is Equipment Lease Calculation?

The Equipment Lease Calculation determines the monthly payment for leasing equipment by calculating depreciation and finance charges. It helps businesses understand their lease obligations and compare financing options.

2. How Does the Calculator Work?

The calculator uses these lease formulas:

Where:

• \( Dep \) — Depreciation ($/month)
• \( Fin \) — Finance fee ($/month)
• \( MP \) — Monthly payment ($)
• \( CC \) — Capitalized cost ($)
• \( RV \) — Residual value ($)
• \( T \) — Term (months)
• \( MF \) — Money factor (decimal)

Explanation: The depreciation represents the equipment's value loss over the lease term, while the finance charge is the cost of borrowing.

3. Importance of Lease Calculation

Details: Accurate lease calculations help businesses budget effectively, compare lease vs. buy options, and understand the true cost of equipment financing.

4. Using the Calculator

Tips: Enter all values in the specified units. Capitalized cost and residual value should be in dollars, term in months, and money factor as a decimal (e.g., 0.0025 for 0.25%).

5. Frequently Asked Questions (FAQ)

Q1: What is capitalized cost?
A: This is the negotiated price of the equipment plus any fees or additional items being financed in the lease.

Q2: How is money factor determined?
A: The money factor is set by the leasing company and represents the financing portion of your lease payment.

Q3: What's a good residual value percentage?
A: Typical residuals range from 30-60% of original value depending on equipment type and lease term.

Q4: Should I choose a longer or shorter lease term?
A: Shorter terms typically have higher monthly payments but lower total cost, while longer terms spread costs but may cost more overall.

Q5: Are there other lease costs not included here?
A: Yes, this calculates base payment only. Taxes, insurance, and maintenance may be additional.