Use of Financial Calculator TI BA II Plus required. Marge wants to figure out the best (lowest financing cost)for the car of her dreams which costs $35,000. Which of the following offers should she choose?

Question

Quizplus · Accepted Answer

To determine the lowest financing cost, we need to calculate the total cost of each option.

Option A: 
Total cost = $1000 (deposit) + ($455/month x 60 months) + $15,000 (buyout option) 
Total cost = $28,300

Option B: 
Total cost = $1000 (deposit) + ($455/month x 36 months) + $20,000 (buyout option) 
Total cost = $36,320

Option D: 
Total cost = $5,000 (deposit) + ($565/month x 60 months) - $22,000 (expected value) 
Total cost = $20,900

Therefore, the best choice is option D, as it has the lowest total financing cost of $20,900.

Use of Financial Calculator TI BA II Plus Required