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more free magazines       Money Factor Background: A Mathematical Proof   Notations C: The total loan amount. In the case of an auto lease, this is the car price. F: The residual value. r: The monthly interest rate. If the annual interest rate is R%, the monthly interest rate r is R/1200. N: The term, or the number of months of a lease. P: The monthly payment.  The monthly payment formula for a lease is given by: When and , one can write: Using the above expression, the average interest paid per month can be written as: Since , one can rewrite the average interest payment as: Hence, the Money Factor can be used to conveniently and reliably estimate the average interest rate on loans.

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