!craft My Blackboard My Courses Organizations Career Couch 122411.0ONLINE Cumula
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!craft My Blackboard My Courses Organizations Career Couch 122411.0ONLINE Cumulative SectionM20 Assignment Loan Options (OHM) 03 In this problem, we will compare the mer could use your car as a trade-in or sell t outright when you want to buy your next car. We want to see it ts of leasing vs. buying a car. When you lease a car, you will typically have a smaller payment for a shorter period of ity If you buy a car, you have equity, You time. This sounds attractive, but at the end of the lease you either have to buy the car or get a new car with no equ If it makes sense to lease then buy the car after the lease. were going to assume you can afford the payment on a new car. If you choose to lease, you will set aside the money you're saving into an annulty. If the car payment is $500 but the lease lease, you will use the money from the a down Car payment is $300, then you are going to set aside $200 per month into the annuity. At the end of the annuity to make a down payment on buying out the car. Then youril take out a new loan to pay off the car We will be looking at a Ford Fusion that has a selling price of $4o,000 Buying the Car You are going to buy the car with monthly payments at 4.85% interest for 5.5 years. Your monthly payment will be: $692 How much money will you pay over the life of the loan?$ 11:04 0Explanation / Answer
You will pay $52,223 over the life of the loan
Leasing for 36 months is the best option
Buying the car Monthly Payment (P) 692 Interest Rate ('r) 4.85% No of years (n) 5.5 m 12 FV= P(((1+r/m)^n*m-1)/r/m) = 692((1+(0.0485/12))^(5.5*12))/(0.0485/12) = 52,223You will pay $52,223 over the life of the loan
36 month lease Money to be put in annuity= 692-645 = 47 per month Interest Rate ("r) 1% p.a Interest rate per month (r/m) 0.01/12= 0.000833 no of months= 36 Monthly payment (P)= 47 FV= P(((1+r/m)^n*m-1)/r/m) = 47*(((1+(0.01/12))^(36))-1)/(0.01/12) = 1,717 Amount you would have at the end of 36 months would be $1717 Amount needed to be borrowed= 22400-1717 = 20683 Loan Amount (A) 20683 Interest Rate ('r) 4.85% 0.404% No of years (n) 2 24 m 12 FV= A* (1+r/m)^n*m = 20683*(1+(0.0485/12))^(2*12) = 22,785 Total of Lease Payment (645*36) 23220 Total of Deposits into the Annuity 1717 Total of Payments in last 2 years 22785 Total Money out of Pocket 47722Related Questions
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