Shail is planning on whether to lease or buy a vehicle. He can

1) Buy the vehicle for a total price of $30,000. He is approved for financing with a 5-year term an interest rate of 7.00% compounded daily. Shail has been given a $4000 value for a trade-in. The vehicle will depreciate at 10 % of its value per year. He would end up with biweekly payments until the vehicle is paid off.

2) Lease the vehicle at $600 per month for a 48 month term. Shails trade in of $4000 would be used as a down payment. At the end of the term Shail would have to return the vehicle to the dealership. He would get no equity of the vehicle at the end of the lease.

A) How much will each option cost in total?

B) What are the pros and cons of each choice?

C) Which option is the best choice? Why?

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