Homework 1. You are trying to decide whether to lease or purchase a new car costing $12,000. If you lease, you will have to pay a $400 security deposit and monthly payments of $285 over the 36 month term of the closed end lease. If you purchase the car, you will have to make an $1,800 down payment and will finance the balance with a 36 month loan requiring monthly payments of $340, in addition, you will have to pay a 6% sales tax ($720) on the purchase price, and you expect the car to have a residual value of $4,300 at the end of three years. Should you buy or lease. Assume an interest rate of 5% Lease : 400 + 285 * 36 = 10260 9564.83, 10,161.81 purchase = 10460 purchase 2.Suppose you can get a $3,000 rebate on that new $24,000 car or 2.5% financing over 48 months @100%. Your credit union will give you a 7%, 48-month loan. What should you do? 4 years. 502.87, 525.94 3. Let's assume you've decided on 3-year (36 month term) lease of a Toyota Camry XLE that has a sticker price of $24,600 (MSRP). You've managed to negotiate the price down to $23,000. You decide not to make a down payment, but you have a trade-in worth $5000. Now, the dealer tells you interest rate is 9% and the Residual Percentage is 60% of MSRP. What is the lease payment (not including sales tax)? 212.85