Assignment 5.3: Investment Decisions (continued) 15. You are comparing offers from a dealership to either buy or lease a car. The price to purchase is $25,950, plus taxes. You have a $3000 down payment for either option. The lease is over four years and payments are $385, plus 13% tax per month. The residual value is set at 45%. You would take the option to purchase it after the four years and pay for it outright (include 13% taxes). There is a lease acquisition fee of $539. To finance the car with monthly payments over 48 months, the bank offers you 7.5%, compounded monthly. a) Find the monthly payment if you finance the purchase of the car. (2 marks) b) Find the total amount of interest you pay over the loan period. (2 marks) Assignment 5.3: Investment Decisions continued) c) Find the total cost to lease the car and buy it out at the end of the term. (3 marks) d) How much do you save by purchasing instead of leasing and then buying it out? (2 marks) e) When might leasing be a better option than buying a depreciating asset such as a car? (2 marks)