[Graphics:rentgr2.gif][Graphics:rentgr1.gif]
We are given following data from a standard lease contract
[Graphics:rentgr2.gif][Graphics:rentgr3.gif][Graphics:rentgr2.gif][Graphics:rentgr8.gif]
where
[Graphics:rentgr2.gif][Graphics:rentgr9.gif]
We want to solve the payment function for the monthly interest rate
[Graphics:rentgr2.gif][Graphics:rentgr10.gif]
[Graphics:rentgr2.gif][Graphics:rentgr11.gif]
Substituting the last value back into the payment function,
[Graphics:rentgr2.gif][Graphics:rentgr12.gif]
[Graphics:rentgr2.gif][Graphics:rentgr13.gif]
The annualized rate is
[Graphics:rentgr2.gif][Graphics:rentgr14.gif]
[Graphics:rentgr2.gif][Graphics:rentgr15.gif]
Alternatively, we could use the payment approximation formula
[Graphics:rentgr2.gif][Graphics:rentgr16.gif]
[Graphics:rentgr2.gif][Graphics:rentgr17.gif]
[Graphics:rentgr2.gif][Graphics:rentgr18.gif]
The approximate annualized rate is
[Graphics:rentgr2.gif][Graphics:rentgr19.gif]
[Graphics:rentgr2.gif][Graphics:rentgr20.gif]
which is very close.