You are considering either leasing or purchasing a car. You notice an ad that says you can lease the car you want for $616.00 per month. The lease term is 48 months with the first payment due at inception of the lease. You must also make an additional down payment of $1,340. The ad also says that the residual value of the vehicle is $21,937. The list price of the vehicle is $36,624, but after much research, you have concluded that you could buy the car for a total "drive-out" price of $33,600. What is the quoted annual interest rate you are actually paying with the lease?

You are considering either leasing or purchasing a car. You notice an ad that says you can lease the car you want for $616.00 per month. The lease term is 48 months with the first payment due at inception of the lease. You must also make an additional down payment of $1,340. The ad also says that the residual value of the vehicle is $21,937. The list price of the vehicle is $36,624, but after much research, you have concluded that you could buy the car for a total "drive-out" price of $33,600. What is the quoted annual interest rate you are actually paying with the lease?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 2P

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You must decide whether to buy a new car for $19,000 or lease the same car over a three-year period. Under the terms of the lease, you can make a down payment of 1000$ and have monthly payments of $.150 At the end of the three years, the leased car has a residual value (the amount you pay i 12,000f you choose to buy the car at the end of the lease period) of $. Assume you can sell the new car at the end of the three years at the same residual value. Is it less expensive to buy or to lease? Question content area bottom Part 1 The cost for buying the car and selling it after three years would be $ enter your response here.
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