Compare the cost of leasing and buying the car

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Reference no: EM131966851

1. You must decide whether to buy a new car for $20,000 or lease the same car over a 3-year period. Under the terms of the lease, you make a down payment of $2000 and have monthly payments od $200. At the end of the 3 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 $10,000. Assume you sell the car at the end of the 3 years at the same residual value. Compare the cost of leasing and buying the car

Buy $11,000, lease $9200

Buy $10,000, lease $890

Buy $10,000, lease $9200

Buy $10,000, leae $9400

2. Many insurance companies carry a deductible provision that states how much of a claim you must pay out of pocket before the insurance company pays the remainin expenses. Suppose you have a car insurance policy with a $900 deductible provision (per claim) for collisions. During a 2-year period, you file claims for $550 and $1325. The annuanl premium for the policy is $400. Determine how much you would pay with and without the insurance policy

with policy $1775, w/o $2225

w/p $2600, w/o $1875

w/p $1850, w/o $1875

w/p $2250, w/o $1875

Reference no: EM131966851

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