Homework: Module 2 Problems: Fin Consideration: Buy vs Lease Save Score: 0 of 1 pt 1 of 2 (0 complete) HW Score: 0%, 0 of 2 pts Instructor-created question Question Help Samu 1 and Grace Paganelli wart to replace t er 1996 ckup which Samue crives fr urk. ey already own two vehicles but nBed to replace Samuel's ruck because t has nearly 225 000 miles an the Ddame er. The replacement must be ve de that s hlS job as a self-amplayed lectician. Samuel nov s het he drives a lot on he co and is worried about the high mileage penalty on many eases as well as e ees fr excessive ear and ar. However, G ace is more o ncerne about he depreciat on lo35 n new Iruck purchase than he mileege penalty and would rather lease the new vehicle. She also likes the ides of having a new, safer truck every few years without the hessle of resale. Samuel also does not lke the fact thet, if they lease, they would not own the vehicde he will use for work. Warranty protection to insure the truck remains in service is very important. They pa hat they can afford ID spend $ 70 per month over 4 years or a new ve de as long as her other ass ca e ens $ suc as nsurance, gas, and mame ano are rot too high. Tha Paganelis also do not ow where to s ar ooking or a vahicle w hout he hassle of negotieting with dealerships. c. What is the highast price they Gan pay on the nw vehicle if thay ca affard a daon payment of $4,100? Aue they finance their purcha for 48 months at .percnt. (Hint This is a present value of an arnuity problem.) d. According to the National Automcove Daaler Association NADA gud ound at www.nadagu des com are the Paganelis bater seling their pickup or use it as a 1 ade n? Consicer both price and time in your answer. f. Explain to Grace and Samuel the guldelines of leasing and whether or not it is a smart financlal move for them to consider. Would they be better off with a closec-end or open-end lease? From a purely finencial perspectve, would you recommend leasing or financing? c. Samuel and Grace can afford a down payment of $4.100 a monthly payment of $570 and can financtheir purchase or 48 months at 7.9 percent, then the highest priced veh le 1hey can afford is $ Rou o he nearest cent) d. The Paganelis are better of: (Select the best answer below.) A. salling their ehicle because thay wil get less manay than they would by trading it. Hwever, trading in the vshicle ofifers the convenience af nat having to is, show, or sell the ehizle on their NT B. selling their vehicle because they wll get more money than they would by trading it. However, trad ng In the vehicle offers the convenlence of not having to list, show, or sell the vehicle on thelr own. trading thesr vehicle because they wil get less money than they would by selling it. HDWever. tel ng tho vtahille D ers the convenience no having to iest, show ar trade the vehicle an thEr ann. trading their wehicle because they will get more money than they would by selling it. However D. the vehicle offers the convenience of not g to list, show, or trade the vehicle on their own f. Financing is most likaly the batter alternative to leasing bscause:Selct all hat opply.) A. thers are no maintainanca costs: With a laase, Samuel would nead to make sure the vahidle was servicad often. there are no restrictions or end of leese fees or "wear and tear . working es an electr cien. Samuel would probably put everything in the venicle causing at eest some dents and dings there are no m eage restr tens: there are no insurance requrements. Since you do not own leased vehicle. Samuel would need to insure any vehicle he leased. there are no modication resinctions: Again as an electnaan arnue{ s l e "f 1D wart lD modify t e truc ta suit tus buslnests needs m ng or work narma y puts exc ss m es an hB ve e, as f r an r de en em bus nessman ike For a cos : IVR se, the ansumer shD ld e Rss than 5 000 m es annualy. ex:n am un D Click to select your answerfs) and then dick Check Answer Homework: Module 2 Problems: Fin Consideration: Buy vs Lease Save Score: 0 of 1 pt 1 of 2 (0 complete) HW Score: 0%, 0 of 2 pts Instructor-created question Question Help Samu 1 and Grace Paganelli wart to replace t er 1996 ckup which Samue crives fr urk. ey already own two vehicles but nBed to replace Samuel's ruck because t has nearly 225 000 miles an the Ddame er. The replacement must be ve de that s hlS job as a self-amplayed lectician. Samuel nov s het he drives a lot on he co and is worried about the high mileage penalty on many eases as well as e ees fr excessive ear and ar. However, G ace is more o ncerne about he depreciat on lo35 n new Iruck purchase than he mileege penalty and would rather lease the new vehicle. She also likes the ides of having a new, safer truck every few years without the hessle of resale. Samuel also does not lke the fact thet, if they lease, they would not own the vehicde he will use for work. Warranty protection to insure the truck remains in service is very important. They pa hat they can afford ID spend $ 70 per month over 4 years or a new ve de as long as her other ass ca e ens $ suc as nsurance, gas, and mame ano are rot too high. Tha Paganelis also do not ow where to s ar ooking or a vahicle w hout he hassle of negotieting with dealerships. c. What is the highast price they Gan pay on the nw vehicle if thay ca affard a daon payment of $4,100? Aue they finance their purcha for 48 months at .percnt. (Hint This is a present value of an arnuity problem.) d. According to the National Automcove Daaler Association NADA gud ound at www.nadagu des com are the Paganelis bater seling their pickup or use it as a 1 ade n? Consicer both price and time in your answer. f. Explain to Grace and Samuel the guldelines of leasing and whether or not it is a smart financlal move for them to consider. Would they be better off with a closec-end or open-end lease? From a purely finencial perspectve, would you recommend leasing or financing? c. Samuel and Grace can afford a down payment of $4.100 a monthly payment of $570 and can financtheir purchase or 48 months at 7.9 percent, then the highest priced veh le 1hey can afford is $ Rou o he nearest cent) d. The Paganelis are better of: (Select the best answer below.) A. salling their ehicle because thay wil get less manay than they would by trading it. Hwever, trading in the vshicle ofifers the convenience af nat having to is, show, or sell the ehizle on their NT B. selling their vehicle because they wll get more money than they would by trading it. However, trad ng In the vehicle offers the convenlence of not having to list, show, or sell the vehicle on thelr own. trading thesr vehicle because they wil get less money than they would by selling it. HDWever. tel ng tho vtahille D ers the convenience no having to iest, show ar trade the vehicle an thEr ann. trading their wehicle because they will get more money than they would by selling it. However D. the vehicle offers the convenience of not g to list, show, or trade the vehicle on their own f. Financing is most likaly the batter alternative to leasing bscause:Selct all hat opply.) A. thers are no maintainanca costs: With a laase, Samuel would nead to make sure the vahidle was servicad often. there are no restrictions or end of leese fees or "wear and tear . working es an electr cien. Samuel would probably put everything in the venicle causing at eest some dents and dings there are no m eage restr tens: there are no insurance requrements. Since you do not own leased vehicle. Samuel would need to insure any vehicle he leased. there are no modication resinctions: Again as an electnaan arnue{ s l e "f 1D wart lD modify t e truc ta suit tus buslnests needs m ng or work narma y puts exc ss m es an hB ve e, as f r an r de en em bus nessman ike For a cos : IVR se, the ansumer shD ld e Rss than 5 000 m es annualy. ex:n am un D Click to select your answerfs) and then dick Check
