Purchase Costs Leasing Costs Down payment $ 1,900 Security deposit $ 1,040 Loan payment $ 550 for 36 months Lease payment $ 400 for 36 months Estimated value at end of loan $ 5,000 End of lease charges $ 900 Opportunity cost interest rate 5 percent Based on the costs listed in the table above, calculate the costs of buying and leasing a motor vehicle. (Round your answers to the nearest whole number.) Buying & Leasing Total purchase cost Total leasing cost
Risk and return
Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary.
Capital Asset Pricing Model
Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.
| Purchase Costs | Leasing Costs | ||||||
| Down payment | $ | 1,900 | Security deposit | $ | 1,040 | ||
| Loan payment | $ | 550 | for 36 months | Lease payment | $ | 400 | for 36 months |
| Estimated value at end of loan | $ | 5,000 | End of lease charges | $ | 900 | ||
| 5 | percent | ||||||
Based on the costs listed in the table above, calculate the costs of buying and leasing a motor vehicle. (Round your answers to the nearest whole number.)
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