Gavin Anderson is trying to decide whether to lease or purchase a new car costing $$20,000.$ If he leases, he'll have to pay a $$700$ security deposit and monthly payments of $$380$ over the $36-$month term of the closed$-$end lease. On the other hand, if he buys the car then he'll have to make a $$3,000$ down payment and will finance the balance with a $36-$month, $5$ percent loan requiring monthly payments of $$551\mathrm{.}46$; he'll also have to pay a $7\%$ sales tax $($$$1,400)$ on the purchase price, and he expects the car to have a residual value of $$7,200$ at the end of $3$ years. Gavin can earn $3$ percent interest on his savings and plans to include the sales tax in the amount financed on the purchase. Use the automobile lease versus purchase analysis form in Worksheet $5\mathrm{.}1$ to find the total cost of both the lease and the purchase and then recommend the best strategy for Gavin.

Gavin should

$-$Select$-$

the car because it is the least expensive alternative.