Should Jacy Lease or Purchase?

Jacy is considering the purchase of a Porsche Boxster and has negotiated a final price of

$$48,100.$ He's trying to decide whether to lease or purchase the vehicle.

If he leases, he'll have to pay a $$600$ security deposit, a capital cost reduction

$($down payment$)$ equal to $10\%$ of the vehicle's cost, and monthly payments of

$$852$ over the three$-$year term of the closed$-$end lease. The Porsche will have a

residual value of $$19,240.$

On the other hand, if he buys the Porsche, he'll have to make a $10\%$ down

payment, pay sales tax equal to $8\%$ of the vehicle's price, and make monthly

payments of $$1,278$ on a three$-$year loan that charges $4\%$ interest.

Be aware that funds used as down payments and security deposits incur an

opportunity cost of $5\%,$ as they could have earned interest for Jacy over the period

of the lease or loan.

Use the automobile lease$-$versus$-$purchase analysis worksheet that follows to determine the total

cost of both the lease and the purchase and then recommend the best strategy for Jacy. To

complete the worksheet, enter the appropriate values in their corresponding blanks. $($Note: Round

each value to the nearest whole dollar.$)$

AUTOMOBILE LEASE$-$VERSUS PURCHASE$-$ANALYSIS