The formula to calculate the Interest Rate (IR) from Money Factor (MF) is:
\[ IR = MF \times 2400 \]
Where:
Money factor is a way to express the interest rate in lease agreements. It is commonly used in car leasing and can be converted to an annual percentage rate (APR) by multiplying by 2400. Understanding this conversion is crucial for comparing lease offers and understanding the cost of leasing over time.
Let's assume the following value:
Using the formula to calculate the Interest Rate (IR):
\[ IR = MF \times 2400 = 0.00125 \times 2400 = 3.00\% \text{ APR} \]
The Interest Rate (IR) is 3.00% APR.