Answer the question.
-You must decide whether to buy a new car for $28,000 or lease the same car over a three-year period. Under the terms of the lease, you make a down payment of $2000 and have monthly
Payments of $350. At the end of three years, the leased car has a residual value (the amount you
Pay if you choose to buy the car at the end of the lease period)of $15,000. Assume you sell the new
Car at the end of three years at the same residual value. Compare the cost of leasing and buying the
Car.

Question

Quizplus · Accepted Answer

Leasing: Down payment + (Monthly payments * Number of months) + Residual value to buy the car = $2,000 + ($350 * 36) + $15,000 = $2,000 + $12,600 + $15,000 = $29,600. The cost of leasing is the total amount spent without considering the residual value because it's an option to buy at the end. Buying: Initial cost - Residual value = $28,000 - $15,000 = $13,000. The cost of buying is the depreciation over the three years. Therefore, the cost of buying is $13,000 and the cost of leasing is $14,600.

Answer the Question. -You Must Decide Whether to Buy a New Car for New