Question 1:

You have graduated and have obtained a lucrative job. Your job requires you to drive to client/customer sites and you are expected to drive a car your clients would appreciate. You are paid an automobile allowance as part of your employment (taxable as part of your salary but you can deduct interest/lease payments, repairs & maintenance, fuel, etc. on your personal tax return for any business kilometres).

You have decided to purchase a 2020 or 2021 vehicle.

By either going to the automobile website or contacting an automobile dealership determine what vehicle you would be interested in purchasing/leasing. Be sure to consider any options or add-ons that you would want included.

Required 1:

What are the full out-ofpocket cost for purchasing a vehicle of your choice if you decided to pay cash. Show as much detail as you feel necessary. Be sure to include the tire recycling fee, air conditioning fee and GST.

Required 2:

If instead you decided to lease the vehicle, what are the costs associated with that decision. Please note:

Terms and conditions associated with the lease

o lease term

o residua lvalues, and whether they are guaranteed by the lessee or not

o lessors implicit interest rate o purchase options (buyouts) o etc

Cash flows associated with the lease

Required 3:

If instead you decided to get a loan to finance the vehicle, what are the costs associated with that decision. Please note:

• loan term

• interest rate

• cash flows associated with the loan

• Required 4:

• Assume you dont have the cash available to purchase the vehicle outright, which option (required 2 or 3) do you think is the better deal? Explain.