Compare the cost of the following leasing agreement with the finance charge on a loan for the same time period.The price of the car is $14,000,and its projected residual value at the end of four years is $3,000.

Monthly payment
$250
Capital cost reduction
$1,000
Disposition charge
$200

Other things being equal,one would want to finance this car rather than take this lease if the finance cost were less than

Question

Compare the cost of the following leasing agreement with the finance charge on a loan for the same time period.The price of the car is $14,000,and its projected residual value at the end of four years is $3,000.
​
Monthly payment
$250
Capital cost reduction
$1,000
Disposition charge
$200
​
Other things being equal,one would want to finance this car rather than take this lease if the finance cost were less than
​

Quizplus · Accepted Answer

The total cost of the lease is calculated by adding the total monthly payments, capital cost reduction, and disposition charge, then subtracting the residual value. If the finance cost is less than this total lease cost, financing is preferable.

Compare the Cost of the Following Leasing Agreement with the Finance