Break-even lease terminal charge calculator

Subtract the present value of lease payments from comparable purchase cost, then carry the residual allowance to the terminal year. Both alternatives must include the same service and disposal scope.

C_{\text{terminal max}} = \left[\mathrm{PV}_{\text{buy}} - \frac{A_{\text{lease}} \times \left[1 - \left(1 + i\right)^{-n}\right]}{i}\right] \times \left(1 + i\right)^{n}

Calculator

Enter the values you know and leave one box empty. Calculate finds the empty one, the result or any input.

Worked example

Given

$\mathrm{PV}_{\text{buy}}$ = 120,000 $
$A_{\text{lease}}$ = 20,000 $/yr
$i$ = 0.08 ratio
$n$ = 5 year

C_{\text{terminal max}} = \left[120{,}000 - \frac{20{,}000 \times \left[1 - \left(1 + 0.08\right)^{-5}\right]}{0.08}\right] \times \left(1 + 0.08\right)^{5} \approx 58{,}987

Symbols and units

Symbol	Meaning	Unit
$C_{\text{terminal max}}$	maximum total terminal lease charge	$
$\mathrm{PV}_{\text{buy}}$	present cost of comparable ownership including disposal	$
$A_{\text{lease}}$	annual end-year lease payment	$/yr
$i$	annual discount fraction	ratio
$n$	number of annual payments before terminal charge	year

Related calculators

Results are estimates for study and screening. Check the inputs, units and assumptions before you use them for design, billing or contract decisions.