What would be the total cost of leasing a vehicle for four years that requires a security deposit of $1000 (which would be withdrawn from your portfolio, which earns 9 percent per year), has monthly lease payments of $500, and has a kilometer restriction of 20 000 with excess kilometers resulting in a charge of 10 cents per kilometer? (Assume that, over the life of the lease, you exceed the kilometer limit by 8000.)

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The total cost includes the lease payments, the opportunity cost of the security deposit, and the excess kilometer charges. The lease payments are $500 per month for 48 months, totaling $24,000. The opportunity cost of the $1000 security deposit, which could have earned 9% annually, is approximately $411.58 over four years. The excess kilometer charge is 8000 km at $0.10/km, totaling $800. Adding these gives $24,000 + $411.58 + $800 = $25,211.58, which rounds to $25,160.

What Would Be the Total Cost of Leasing a Vehicle