LO2 2. Lease versus purchase car decision. Use Worksheet 5.1. Ben Hall is trying to decide whether to lease or purchase a new car costing $18,000. If he leases, he'll have to pay a $600 security deposit and monthly payments of $450 over the 36-month term of the closed- end lease. Ben could earn 1% on the amount of any down payment or security deposit. On the other hand, if he buys the car, then he'll have to make a $2,400 down payment and will finance the balance with a 4% interest rate. He'll also have to pay a 6 percent sales tax ($1,080) on the purchase price, and he expects the car to have a residual value of $6,500 at the end of three years. Use the automobile lease versus pur- chase analysis form in Worksheet 5.1 to find the total cost of both the lease and the purchase, and then recommend the best strategy for Ben. LO3,4 3. Rent versus buy home. Use Worksheet 5.2. Emma Sanchez is currently renting an apartment for $725 per month and paying $275 annually for renter's insurance. She just found a small townhouse she can buy for $185,000. She has enough cash for a $10,000 down payment and $4,000 in closing costs. Her bank is offering 30-year mortgages at 5 percent per year. Emma estimated the following costs as a percentage of the home's price: property taxes, 2.5 percent; homeowner's insurance, 0.5 percent; and maintenance, 0.7 percent. She is in the 22 percent tax bracket and does not plan to itemize deductions on her taxes. Emma estimates that the value of the home will appreciate 2 percent per year. L04 per 000 op ng be ar ng 4. Maximum affordable mortgage paym Using the maximum ratios for a conventional mortgage, how big a monthly payment could the Ross family afford if their gross (before-tax) monthly income amounted to $3,500? Would it make any difference if they were already making monthly installment loan payments totaling $750 on two car loans? LO2 2. Lease versus purchase car decision. Use Worksheet 5.1. Ben Hall is trying to decide whether to lease or purchase a new car costing $18,000. If he leases, he'll have to pay a $600 security deposit and monthly payments of $450 over the 36-month term of the closed- end lease. Ben could earn 1% on the amount of any down payment or security deposit. On the other hand, if he buys the car, then he'll have to make a $2,400 down payment and will finance the balance with a 4% interest rate. He'll also have to pay a 6 percent sales tax ($1,080) on the purchase price, and he expects the car to have a residual value of $6,500 at the end of three years. Use the automobile lease versus pur- chase analysis form in Worksheet 5.1 to find the total cost of both the lease and the purchase, and then recommend the best strategy for Ben. LO3,4 3. Rent versus buy home. Use Worksheet 5.2. Emma Sanchez is currently renting an apartment for $725 per month and paying $275 annually for renter's insurance. She just found a small townhouse she can buy for $185,000. She has enough cash for a $10,000 down payment and $4,000 in closing costs. Her bank is offering 30-year mortgages at 5 percent per year. Emma estimated the following costs as a percentage of the home's price: property taxes, 2.5 percent; homeowner's insurance, 0.5 percent; and maintenance, 0.7 percent. She is in the 22 percent tax bracket and does not plan to itemize deductions on her taxes. Emma estimates that the value of the home will appreciate 2 percent per year. L04 per 000 op ng be ar ng 4. Maximum affordable mortgage paym Using the maximum ratios for a conventional mortgage, how big a monthly payment could the Ross family afford if their gross (before-tax) monthly income amounted to $3,500? Would it make any difference if they were already making monthly installment loan payments totaling $750 on two car loans