Personal Finance (MindTap Course List)
Personal Finance (MindTap Course List)
13th Edition
ISBN: 9781337099752
Author: E. Thomas Garman, Raymond Forgue
Publisher: Cengage Learning
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Assume you work for a company that leases cars. An auto dealership contacts you and tells you that it has a customer that wants to lease a car and can arrange for your company to purchase the vehicle and then lease it to the customer.  Note that an important variable for you as a leasing firm is the “residual value” of the vehicle when the lease matures and you as the leasing firm must sell the vehicle.  It must be forecast and as a result is the source of much of the risk in the lease.  The customer that they have has sufficient credit and wants to lease a $42,000 vehicle for 4 years with monthly payments.  Your competitor is a leasing company that offers leases for the vehicle requiring the customer to have a down payment of $4,000 and monthly lease payments of $575 beginning when the lease is signed.  So at the signing, the customer must pay $4,575.  If your firm meets the competitors’ terms, what must the residual value be at the end of the lease in 4 years for your firm to earn 9%…
When you purchase a new car, the “sticker price” includes a “destination” charge. Are you purchasing the car FOB shipping point or FOB destination? Explain:
What are the two types of financing options offered for an automobile by a local dealer?
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