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plz answer the question i posted it two days ago but can not get answer Lease or Finance Option Tamera graduated from college and found
plz answer the question i posted it two days ago but can not get answer
Lease or Finance Option Tamera graduated from college and found a job as an online marketing specialist in a social networking company. Within a year, she saved $2000 and was determined to buy a new car. However, she was unsure as to whether she should lease it or buy it by financing the amount from a bank. A car salesman at the showroom gave her the following table illustrating the comparison of the lease vs. finance options for the car she liked. Description Leasing the car Financing the car Manufacturer's Suggested Retail Price (MSRP) $21,500.00 $21,500.00 Additional purchase costs* $1,817.00 $1,817.00 13% HST $3031.21 Net price $23,317.00 $26,348.21 Down payment $2000.00 $2000.00 Term in months 48 48 Monthly payments $250.00 + 13% HST $562.13 (month-beginning payments) (month-end payments) Residual payment to own $12,453.56 + 13% HST Nil "Additional purchase costs include freight & PDI, Air Conditioner Tax, Tire Tax, and registration fees. Assume that money was worth 5.5% compounded annually. a. Which option would be economically better for Tamera? b. Which option would be economically better if the residual value was $15,500 (including HST) for the lease option? c. What size of equal, beginning-of-month lease payments (including HST) would make the lease option economically equivalent to the finance option? Assume the original residual value and the term is still 48 months Step by Step Solution
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