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Specifics
Purchase (Buying) Costs Leasing Costs
Down payment: $2,000 Security deposit: $300.00
Loan payment: $385 for 48 months Lease payment: $295.00 for 48 months
Estimated value at the end of the loan: $6,000.00 End of lease charges: $800.00
Opportunity cost interest rate: 3% Opportunity cost interest rate: 3%
How To

Buying Leasing
Add: Down Payment Calculate and add the total loan amount (monthly loan amount X term in months)
Calculate and add the total loan amount to the down payment (monthly loan amount X term in months) Calculate and add the opportunity cost (multiply security deposit X the interest rate X term in years)
Calculate and add the opportunity cost (multiply down payment X the interest rate % X term in years)
Add end of lease charges

subtract estimated value of car at end of the loan

Group of answer choices

buy: 14720; lease: 14996

buy: 14996; lease:14720

buy: 20000; lease: 15000

Respuesta :

abiolataiwo2015

The cost of buying and leasing is: A. buy: 14720; lease: 14996.

Cost of buying and leasing

1. Cost of Buying:

Total loan payment= 385× 48 months

Total loan payment= $18,480

Cost of buying = Down Payment + Loan payment + ( Opportunity cost ×Down payment× X term in years ) - Ending loan estimated value

Cost of buying= 2,000 +$18,480 + (2000 × 0. 03× 4 years ) - 6,000

Cost of buying= 2,000 + $18,480+240-6,000

Cost of buying= 14,720

2. Leasing:

Total Lease payment=295× 48 months

Total lease payment= $14,160

Leasing= Total lease payment + End of lease charges + ( Security deposit × Opportunity cost× X term in years))

Leasing= $14,160+ 800 + (300 ×0.03×4)

Leasing= $14,160+ 800 +36

Leasing=14996

Therefore the cost of buying and leasing is: A. buy: 14720; lease: 14996.

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