Question

Using the following information, what is the cost to buy a car? Down payment $2000 Monthly loan payment ($300 per month for a 5-year loan) Opportunity cost of down payment ($2000 x loan period (in years) x 2 % interest) Estimated value of vehicle at end of ownership period ($2,000) Select one: a. $18,000 b. $20,000 c. $18,200 d. $20,200 Using the following information, what is the cost to lease a car? . Security deposit $250 Monthly lease payment ($300 per month for a 4-year lease) Opportunity cost of down payment ($250 x loan period (in years) x 2 % interest) End-of-lease charges $800 Select one: a. $13,620 b. $15,470 c. $14,400 d. $14,670

Answer 1

HI

Security Deposit = $250

Monthly lease payment = $300

Opportunity Cost = 2%

End of lease charge = $800

So total cost to lease a car = 300*4*12 + 800 + 250 + 250*4*0.02

=14400 + 800 +250 +20

= $15,470

So option b is correct answer here.

Thanks