Joanna Browne is considering either leasing or purchasing a new Chrysler Sebring convertible that has a manufacturer's suggested retail price (MSRP) of

$33,200.

The dealership offers a

3-year

lease that requires a capital payment of

$3,275

($2,975

down payment +

$300

security deposit) and monthly payments of

$509.

Purchasing requires a

$2,620

down payment, sales tax of

6.6%

($2,191),

and

36

monthly payments of

$910.

Joanna estimates the value of the car will be

$17,000

at the end of

3

years. She can earn

4.7%

annual interest on her savings and is subject to a

6.6%

sales tax on purchases. Make a reasonable recommendation to Joanna using a lease-versus-purchase analysis that, for simplicity, ignores the time value of money.

a.Calculate the total cost of leasing.

b.Calculate the total cost of purchasing.

c.Which should Joanna do?

Question content area bottom

Part 1

a. The total cost of leasing is

$enter your response here.

(Round to the nearest dollar.)