LEASES

3.4

GENERAL LEASE

A lease is a contract that allows for one party to

use the property of another party, for an extended

period of time.

The lessee is the party or individual wanting to

utilize the property.

The lessor is owner of the property.

Rental agreement

Contracts

RENTAL AGREEMENTS

Common rental agreements : landlord and tenant.

In a fixed-term tenancy, either the landlord or the

tenant may terminate a rental agreement when the

specified term is nearing completion.

An at-will tenancy is a tenancy in which either the

landlord or the tenant may terminate at any time by

giving reasonable notice.

The security deposit is initial payment paid by the

tenant and held by the landlord until the property is

returned or vacated.

Jabba The Hutt is asking for a 2000 republic credit

for a security deposit and 950 republic credit per

month rent. What will be the total cost for a 18

month lease?

2000+18*950=19,100 RC

RENTABLE OFFICE SPACES

Class A office spaces are found in the best quality

buildings and the most desirable locations.

Class B office spaces are found in buildings are

well-maintained , but also a little older. Just older

building of Class A.

Class C: older buildings in need of extensive

repairs and are found in less desirable areas.

A company owns a Class B building and charges

$3500/month to rent it. If the company spends

$90,000 to upgrade the facility , by how much would

they have to increase the monthly rent to recover the

cost of the upgrade within 5 years?

5 years = 60 months.

90000/60= $1500/month

The rent in the upgraded facility would need to be

$5000/month.

Luke has moved to New York and wish to rent his

home in Tatooine, so he hires a management

company that charges 7%of the rental price for their

fee. If the home rents for $1500/month, how much

will Luke earn from the monthly rent.

The company charges 7% of $1500, which is $105.

The rest, $1395, is sent to Luke.

LEASING A CAR

The up-front payment.

The monthly payment

The length of the lease

Possible additional charges at the end of the lease.

James wants to lease a new Aston Martin car, and

he is presented with the following three options.

Compute the total cost of each option.

Option 1: $0 up-front, with a payment of $

209/month for 36 months.

Option 2: $999 up-front, with a payment of

$189/month for 36 Months.

Option 3: $2999 up-front, with payment of $149/

month for 36 Months.

Option 1: 0+209*36=$7524

Option 2: 999+189*36=$7803

Option 3: 2999+149*36=$8363

For the new Prius, Arthur is considering leasing

can be purchased for a down payment of $4000 and

36 monthly payments of $550. After 3 years, he will

own the car and , based on projections, he will be

able to sell it for $16,000. If he follows this plan,

what will be total net cost for the car?

The total net cost will be the amount paid less than

the amount recovered.

The amount paid will be 4000+550*36=$23,800

Thus, 23800-16000=$7800

HW 3.4 P. 195

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