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a. What is the total cost to buy the car? b. What is the total cost to lease for 3 years? c. What is the cost to buy the car at the end of the lease? d. How much will Erica have spent in total if she chooses to buy the car at the end of the lease? e. What do you think is the best option for Erica? Why?

a. What is the total cost to buy the car? b. What is the total cost to lease for 3 years? c. What is the cost to buy the car at the end of the lease? d. How much will Erica have spent in total if she chooses to buy the car at the end of the lease? e. What do you think is the best option for Erica? Why?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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2. Erica wants a car. She found one that she wants to buy or lease that has a purchase price of $22 400. She has saved up a down payment of $2200. She wants low monthly payments because she is also paying off a student loan. Buying option: The loan for the purchase price must be repaid in 48 monthly payments of $450.00. Leasing option: There are 36 monthly lease payments of $385.00 including taxes. • The purchase price at the end of the lease is $10 600.00. a. What is the total cost to buy the car? b. What is the total cost to lease for 3 years? c. What is the cost to buy the car at the end of the lease? d. How much will Erica have spent in total if she chooses to buy the car at the end of the lease? e. What do you think is the best option for Erica? Why?
Transcribed Image Text:2. Erica wants a car. She found one that she wants to buy or lease that has a purchase price of $22 400. She has saved up a down payment of $2200. She wants low monthly payments because she is also paying off a student loan. Buying option: The loan for the purchase price must be repaid in 48 monthly payments of $450.00. Leasing option: There are 36 monthly lease payments of $385.00 including taxes. • The purchase price at the end of the lease is $10 600.00. a. What is the total cost to buy the car? b. What is the total cost to lease for 3 years? c. What is the cost to buy the car at the end of the lease? d. How much will Erica have spent in total if she chooses to buy the car at the end of the lease? e. What do you think is the best option for Erica? Why?
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